Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — ENERGY

Oral Answers to Questions — Alternative Energy Sources

Mr. Knox: asked the Secretary of State for Energy what proportion of the research and development budget of his Department is devoted to research into alternative sources of energy.

The Under-Secretary of State for Energy (Mr. John Moore): The Department's expenditure on research and development programmes in renewable forms of energy is expected to be about £11 million this year, some 30 per cent. of the Chief Scientist's budget.
The Government as a whole are expected to spend some £55 million on R & D on non-nuclear technologies including oil, coal, conservation and the renewables. This is about 30 per cent. of the estimated total Government spend on energy technology R & D.

Mr. Knox: Does my hon. Friend think that more should be spent on research into alternative sources of energy? If Britain cannot afford to do so on its own, does my hon. Friend agree that there is a strong case for a substantial expansion of the EEC programme?

Mr. Moore: When considering whether more money should be spent, one should remember that the sum being spent has to be put in the context of the total spending on energy supply industries throughout the United Kingdom, which are some of the major investors in energy supply throughout the Community. Clearly, we expect to get our juste retour through the Community's new four-year alternative budget.

Mr. Eadie: The Minister must be aware that there is a great deal of public interest in alternative sources of energy. Is he prepared to tell the House the delays that his Department has estimated in the alternative research programmes—which are varied and many—as a consequence of a lack of funding? I think that the Government should tell us.

Mr. Moore: I reject any suggestion that there is delay caused by a lack of funding. The renewable energy research expenditure has until now been essentially pure research. There has been no delay caused by a lack of funds. Total expenditure, including that of the nationalised industries, on energy research and development this year in the United Kingdom will be about £374·6 million. Non-nuclear expenditure will be £159·4 million, or 43 per cent. of the total.

Oral Answers to Questions — Energy Conservation

Mr. Chapman: asked the Secretary of State for Energy if he will make a statement on progress in energy conservation, with particular reference to petroleum in motor vehicles.

Mr. John Moore: Total primary energy consumption for the six month period March to August was about 8 per cent. below the level of last year. Oil consumption was down by 12 per cent.; petrol consumption was down by 0·1 per cent.

Mr. Chapman: Is my hon. Friend aware that those figures are to be warmly welcomed, especially the belated changing trend in petrol consumption? Does he agree that British Leyland deserves the thanks of the nation for producing the Metro, with its superb increased performance in miles per gallon?

Mr. Moore: It would be well for us all to compliment the Metro and to wish it well. It would be right and proper, in an impartial sense, to wish well to all fuel-efficient vehicles produced in the United Kingdom.

Mr. Allan Roberts: Does the Minister agree that one reason why there has been a reduction in energy consumption is the recession, and not conservation? Is it not unwise for the Government to charge British industry the world price for North Sea oil? Would it not be


better to charge a lower price and have a two-tier system? Although that might not lead to energy conservation, it might enable British industry to compete more effectively with its overseas competitors.

Mr. Moore: I know, Mr. Speaker, that you prefer Ministers to answer one question at a time. My answer to the first part of the hon. Gentleman's question is that it is legitimate and fair to say that the recession is a factor in the reduction in energy consumption, but, equally, I do not think that anyone would deny that there has been considerable success in energy conservation programmes. I stress, as I always try to do from the Dispatch Box when given the opportunity, that these are long-term programmes that will have a long-term impact. We should not seek short-term instant results.

Mr. Ashton: Are the Government aware that the Labour Party also welcomes the Mini Metro? As the Government are so enthusiastic about the way in which the Mini Metro saves money, will they get the Ministry of Transport, the Chancellor of the Exchequer and the Department of Energy to do something about vehicle excise duty, so that the bigger gas-guzzling cars pay more tax? We proposed that in our manifesto, but the Government dropped the idea.

Mr. Moore: I shall ensure that the hon. Gentleman's words are conveyed to the Departments to which they are addressed.

Oral Answers to Questions — Energy Prices

Mr. Hal Miller: asked the Secretary of State for Energy whether he is satisfied with the progress made by the United Kingdom's European Economic Community partners towards an economic price for energy.

The Secretary of State for Energy (Mr. David Howell): European Community countries agreed at the Council of Energy Ministers on 13 May last on the pursuit of economic pricing for energy supplies. In practice most members have been allowing prices to climb to economic levels for some time past. Where there is evidence that other countries are unfairly subsidising their industries' energy prices,

the Government have not hesitated, and will not hesitate, to take this up with the Commission, as we have done in the case of Dutch gas to horticulture.

Mr. Miller: I thank my right hon. Friend for his efforts so far, but is he aware that industry is anxious because it is not competing on equal terms with its counterparts in the EEC as regards energy prices? Is he also aware that that anxiety is exacerbated because we have our own natural resources, whereas many of our EEC partners do not? Does my right hon. Friend further accept that during a recession it is nonsense to be required to pay more for fuel prices when demand is declining?

Mr. Howell: Having natural resources is one thing; achieving the maximum efficiency, extraction and distribution in our fuel supply industries is another. It is an aim to which the Government are dedicated. I recognise the widespread concern and complaints, and the Government have been looking into them in detail. In addition, we have asked the Confederation of British Industry to make comparisons, to examine them and to bring forward details. I keenly await those details.

Mr. J. Enoch Powell: Does economic pricing mean prices that cover production costs, or market prices? If so, which market?

Mr. Howell: Economic pricing for oil and gas means market prices, which are world market prices. As regards coal and electricity, it means pricing according to long-run marginal costs.

Mr. Adley: Although I welcome my right hon. Friend's point about the horticultural situation, is he aware that many horticulturists have been awaiting recognition of their particular problems vis-a-vis the Dutch, and that they earnestly hope that my right hon. Friend will recognise the exceptional circumstances in which they find themselves? Is my right hon. Friend further aware that they hope that he will make some arrangements to enable them to compete with Dutch producers while the argument with the Dutch is sorted out within the framework of the EEC? Has my right hon. Friend anything to say that will help them?

Mr. Howell: The difficulties of that industry are for my right hon. Friend the Minister of Agriculture, Fisheries and Food to consider. However, this issue has gone to the Commission for consideration, and the Commission has pressed the Dutch Government and Dutch industry. I understand that the matter will be considered by the European Court of Justice.

Dr. Owen: As the Government refuse to cut interest rates and to act on the exchange rate, how can they continue to justify the fact that our industry is paying much higher energy prices than are most other Community countries, that firms are going out of business and that people are being laid off work because our energy prices make our products uncompetitive? When will the right hon. Gentleman make a statement to the House about freeing the coal, electricity and gas boards so that they can negotiate much lower tariffs for our major industrial users?

Mr. Howell: The right hon. Gentleman has made some generalisations, which he must sustain. The coal industry is straining to be competitive within the existing strategy. As regards coal and electricity, I believe that it will succeed and that it is making great strides towards that end. Electricity costs depend greatly on coal costs, and on the efficiency of the industry. At present the industry is being referred to the Monopolies and Mergers Commission. Oil prices are world market prices, and are priced at competitive international prices throughout Europe. Earlier in the year, the British Gas Corporation increased prices to gas/oil levels at a faster rate than did some of our neighbours. However, in response to market changes it reduced the rate at which prices were being increased in the summer by about 25 per cent. for renewed firm contracts. Meanwhile, some continental gas suppliers have been putting up prices at a faster rate. to the same level and beyond. The right hon. Gentleman should examine the facts and bring forward specific details before making such generalisations.

Oral Answers to Questions — Pit Closures

Mr. Skeet: asked the Secretary of State for Energy when next he proposes

to meet the chairman of the National Coal Board about pit closures.

Mr. John Moore: Pit closures are matters for the National Coal Board to deal with in consultation with the unions according to the agreed procedures.

Mr. Skeet: As a result of the substantial reduction in coal sales, will my hon. Friend reconsider part of the investment programme, such as the Vale of Belvoir? Will he redeploy some of the moneys on the marketing side of the business, particularly for fluidised bed combustor? Will he ensure that the miners do not claim an unreasonable pay increase as that will lead to further pit closures?

Mr. Moore: With respect to my hon. Friend's great experience on energy issues, his questions should be addressed to the National Coal Board. It is not the Government's function to manage the industry. It is our function to set the overall financial limits, and the NCB decides how to fulfil the agreed strategy within those limits.

Mr. Ioan Evans: If the hon. Gentleman holds consultations with the chairman of the NCB, will he ensure that no pits with known reserves are closed? In addition, will he make financial arrangements with the coal board so that coal from existing stocks can be used, rather than imports?

Mr. Moore: The NCB decides such matters. I should have thought that those who want to ensure the long-term success of the coal industry would welcome the fact that, unlike many of our industries, the coal industry is more than 95 per cent. self-sufficient, even in this difficult year.

Mr. Patrick McNair-Wilson: Is my hon. Friend aware that vast sums of money are being = spent on stockpiling un- sold coal? Will he hold urgent talks with the chairman of the NCB on the question of reducing coal prices, rather than raising them? Does my hon. Friend accept that that will help to stimulate electricity demand and so remove some of the unfair competition that this country faces from its competitors in the EEC and elsewhere?

Mr. Moore: Again, my hon. Friend invites me to make subjective decisions


about the management of individual nationalised industries. The framework that the Government established for the coal board is robust enough to take the inevitable strains associated with short-term changes in supply and demand, and thus to stay within the Government's external financial limits, which flow annually from our four-year coal strategy.

Mr. Eadie: The Minister is responsible for the coal industry, but he has delegated responsibility for it. Will he ignore any predatory cries—from whatever quarter—for a pit closure programme? Does he agree that it would be a form of energy lunacy to contract the coal industry, when there is political uncertainty and instability in the Middle East?

Mr. Moore: I acknowledge the hon. Gentleman's comments, but the coal strategy is for the long-term success of our domestic coal industry. Massive investment, in excess of £800 million a year, is being made in the industry. That is the strategy for a successful industry, not one in decline.

Oral Answers to Questions — North Sea Gas

Mr. Cadbury: asked the Secretary of State for Energy if he will bring forward legislation to alter the statutory provisions relating to gas production so as to enable private companies to produce gas from the North Sea for resale to third parties in the United Kingdom for use as fuel.

Mr. David Howell: There is already scope under section 8 of the Energy Act 1976 for North Sea gas to be supplied direct to third parties for use as fuel.

Mr. Cadbury: Is my right hon. Friend aware that the industry suffers from a serious shortage of gas? Does he agree that the best way to accelerate gas production is to break the monopoly of purchase right, now enjoyed by the British Gas Corporation, and to allow private companies to produce and sell gas direct to industry?

Mr. Howell: My hon. Friend is correct. The industry is facing an excessive demand for the short-term supply of gas, arising from the rush of industrial customers away from oil and into gas. This has created intense strain and dragged prices up. The Chemical Industries Association has put certain suggestions to my

Department for greater access by industrial consumers direct to the North Sea. In fact, such consumers have some access already for feedstock purposes and in one case for fuel purposes also. I have said that the Department will consider these representations.

Mr. Douglas: Is the Minister aware that he must be very careful about the way in which he tackles the issue of gas in the northern and southern sectors of the North Sea? Is he aware also that it is vital to ensure that firms and industries already established in the United Kingdom benefit, particularly from the ethane that will come ashore as a result of the gas-gathering system?

Mr. Howell: The hon. Gentleman raises questions about the gas-gathering system which do not arise directly from this question. However, I recognise that difficult decisions will have to be taken by myself and my Department as well as by other parties concerned. We are closely examining the matter with a view to reaching early decisions.

Oral Answers to Questions — Advanced Gas-cooled Reactors

Mr. Dobson: asked the Secretary of State for Energy what is the total capital cost to date of the advanced gas-cooled reactor programme, including money spent on stations not yet in operation.

The Under-Secretary of State for Energy (Mr. Norman Lamont): I am advised by the CEGB that the total capital cost to date of its existing advanced gas-cooled reactor programme was £1,100 million at 31 March 1980—this figure aggregates expenditure incurred at historic cost price levels; it excludes the cost of initial nuclear fuel and interest during construction. In addition, £28 million was spent on Heysham II up to March 1980.

Mr. Dobson: Can the Minister explain how he or the CEGB arrived at those figures, when in August 1979 the CEGB told me in answer to a letter that the total cost was £1,349 million?

Mr. Lamont: Perhaps the hon. Member will send me the letter, and I will then attempt to reconcile the figures for him. I cannot comment any further.

Mr. Rost: Is my hon. Friend satisfied that it is right to go ahead with


ordering two more AGRs of an unproven reactor system? Should he not wait at least until we have a realistic estimate of the costs, reliability and the length of time the reactors will take to build?

Mr. Lamont: My hon. Friend refers to these reactors as unproven, but of course we have the experience of Hinckley. That experience shows generation costs of 1·35p per kilowatt hour, which compares extremely favourably with electricity produced from the first half of Drax, at 1·52p per kilowatt hour. I assure my hon. Friend that the cost estimates for the AGR have been examined very rigorously, and some of that evidence was placed before the Select Committee.

Oral Answers to Questions — Electricity Generation

Mr. Hooley: asked the Secretary of State for Energy what excess of electricity generating capacity is likely to arise in 1983 if the forecast by the Electricity Council of a simultaneous maximum demand of 46·2 GW for 1982–83 proves correct.

Mr. Norman Lamont: I am advised by the CEGB that it expects the declared net capability of the system in the winter of 1982–83 to be 59·6 GW, resulting in a margin of capacity of 29 per cent. This figure is, however, dependent on the rate of commissioning new plant and decommissioning old plant in the meantime.

Mr. Hooley: As we already have about 10 GW more in the pipeline than is currently on stream, and as this will produce over and above what the Minister has said will be excess capacity, what is the point of a huge nuclear programme to produce electricity which, clearly, will not be required?

Mr. Lamont: The hon. Member has heard the questions that have already been put at Question Time today about energy costs. The point of placing new orders for new plant is to get competitive electricity. All the evidence that we have is that nuclear electricity will be competitive, and that is why we wish to replace old expensive plants with cheaper modern nuclear ones.

Mr. Watson: Does my hon. Friend believe that the 28 per cent. planning margin, as used by the CEGB, is realistic? Does he not think that it might lead us to invest too much in electricity generating plant capacity?

Mr. Lamont: This is the industry's judgment of what is required to guarantee security of supply. My hon. Friend will know that during the winter before last we came within 1 GW of an interruption to supply. When my hon. Friend quotes 28 per cent., he should allow for the outages of plant due to malfunctioning. The estimate is that we could come within 3 per cent. at peak periods.

Mr. Ashton: If there is 29 per cent. excess capacity, and if modern nuclear power stations are to replace the old ones, how many pit closures will there be in 1982–83?

Mr. Lamont: I do not think that arises out of the question.

Oral Answers to Questions — North Sea Oil Production (Safety)

Mr Dalyell: asked the Secretary of State for Energy if he will now make a statement on his progress in improving safety in the North Sea, in the light of the Burgoyne committee report, and the Norwegian inquiry into the loss of the Alexander Kielland.

The Minister of State, Department of Energy (Mr. Hamish Gray): I shall make a detailed statement on the Government's response to the Burgoyne committee report in opening the debate which we are due to have on 6 November. I am placing in the Libraries of both Houses a summary of the Government's response to all the recommendations in the report.
As regards the Alexander Keilland disaster, we still await the report of the Norwegian commission of inquiry. Its findings will be taken fully into account in developing our own offshore safety requirements.

Mr. Dalyell: As well as a response in the Library to the recommendations, will the Minister place in the Library a response to the note of dissent by Mr. Lyons and Mr. Miller, the trade union representatives on Burgoyne, who argued very convincingly that the health and safety aspects should not be vested in the sponsoring Department?

Mr. Gray: I hope that the hon. Member will attend our debate on 6 November, when he will have the opportunity to make his point.

Mr. Greville Janner: Will the Minister reply to the question posed by my hon. Friend? Does he not feel that it is wrong that the Department of Energy should retain its supervision over offshore oil in this respect? It is the only Government Department to do so. All other Government Departments have had their powers vested in the Health and Safety Commission.

Mr. Gray: These points will rightly be dealt with when we have our debate, and the House will not wish me to take time now in dealing with them.—[HON. MEMBERS: "Answer the question.")

Mr. Dalyell: Will the Minister answer the question that I put to him—[Interruption.]

Mr. Speaker: Order. Occasionally—in fact very occasionally—I call an hon. Member to ask a second supplementary question. Too often it is a Minister from the Front Bench. Today I am calling an hon. Member from the Back Bench.

Mr. Dalyell: Will the Minister put into the Library, before the debate on Thursday, a response to the note of dissent by Mr. Lyons and Mr. Miller, the trade union representatives, who argued that the health and safety aspects should not be vested in the sponsoring Department? This is a matter of great consequence.

Mr. Gray: I repeat that this Matter will be dealt with fully during the debate.

Oral Answers to Questions — Oil Exports

Mr. Greville Janner: asked the Secretary of State for Energy when he anticipates the United Kingdom will be an exporter of oil.

Mr. Gray: The United Kingdom has exported some oil for a number of years, but for the last few months production has exceeded consumption so that we have become a net exporter. For some time ahead, production and consumption will be finely balanced with monthly production, except perhaps during the winter, exceeding consumption.

Mr. Janner: Can the Minister assure the House and the country that if the Straits of Hormuz are blocked we shall still have enough oil available for this country's needs?

Mr. Gray: It would be difficult for anyone to anticipate the world oil supply in the event of such an action. There is no way in which this country can divorce itself from the problems of other parts of the world. At present it appears that we shall survive any immediate threat.

Mr. Gordon Wilson: Does the Minister not realise that, in addition to worry over the export of oil, it is feared that there will be loss of opportunities caused by the export of petrochemicals? Will he give an assurance that one of the intentions of his Department will be to secure petrochemical production in Scotland and that, if necessary, he will be prepared to consider giving a rebate on royalties or reducing petroleum revenue tax, to allow cheaper feedstock to be made available to encourage petrochemical companies to establish or expand in Scotland?

Mr. Gray: Certainly it will be the intention of the Department of Energy to ensure that the highest possible amount of petrochemical development takes place in the United Kingdom. It seems likely that Scotland will have its share of benefits in that case.

Oral Answers to Questions — Coking Coal

Mr. Dormand: asked the Secretary of State for Energy what consultations he has had with the National Coal Board and the British Steel Corporation about the importing of coking coal in 1981.

Mr. John Moore: It is for the BSC to arrange its own coal supplies after discussions with the NCB. I have not been involved in these discussions, though I have been kept informed of developments.

Mr. Dormond: Is the Minister aware that the agreement reached for 1981 between the NCB and BSC includes the purchase by the NCB of 1 million tons from pits in the North-East? Is he satisfied with that arrangement? Is he further aware that the coking coal involved necessitates a subsidy from the NCB of


£14 per ton? Should not that money come from the Government, as is the case with our competitors?

Mr. Moore: To answer the first part of the question would, as I said earlier, require me to be involved in the detailed management of the industry, which is not my function. The agreement provides for both organisations to be free to operate commercially and to reach agreements. The agreement announced was successful for both sides of the industry, as opposed to the taxpayer.

Mr. Michael Brown: Do I take it from that answer that BSC has commercial freedom to purchase its coking coal from the cheapest source?

Mr. Moore: As the Government have made clear on many occasions, nationalised industries are free to pursue their commercial interests. BSC has negotiated an arrangement, the details of which are commercially confidential, and it is pursuing further negotiations concerning a longer period. Yes, the BSC has commercial freedom.

Oral Answers to Questions — Coal stocks

Mr. Skinner: asked the Secretary of State for Energy when he expects to meet National Coal Board chiefs regarding coal stocks; and if he will make a statement.

Mr. John Moore: I keep in close touch with the NCB, but have no specific plans for a meeting on this subject.

Mr. Skinner: Is the Minister aware that the latest figures suggest that about 36 million tonnes of coal are at the pit top and that we are rapidly reaching the figure that caused the tragic pit closures in the 1950s and 1960s? Does he accept that because of the industrial recession caused by this Government we shall be back on the merry-go-round of pit closures unless more subsidies are given for stocking coal and for coal generally, similar to those given by our Continental competitors, which will put an end to coal imports, which stand at about 6 million tonnes this year? Does the hon. Gentleman agree that such measures would ensure a healthy and viable coal industry into the 1980s?

Mr. Moore: Facts are more interesting than opinions. Stocks are below the 1978

level and are not much different from the 10-year running average. There are 15·1 million tonnes at pitheads and 19·2 million tonnes at power stations, not 36 million tonnes. In relation to imports, we should remember that about 87 per cent. of the modest imports to the United Kingdom come from Australia and the United States, and not from those countries that seek to subsidise their domestic coal industries.

Mr. Hannan: Can my hon. Friend put the imports into perspective? What is the relationship between our coal imports and exports?

Mr. Moore: That is an interesting point. We export approximately 3 million tonnes of coal, compared with the expected total imports for 1980–81 of 8 million to 9 million tonnes, which is a 6 million tonnes excess of imports over exports. In the first six months of the year the three countries on the Continent that are heavily subsidising their coal industries, France, Belgium and West Germany, exported 34,000 tonnes of coal to us, whereas we exported 404,000 tonnes to them.

Mr. Eadie: When next the Minister meets the NCB, will he remember that the miners were promised that they would not become victims of a fluctuating market? Does the hon. Gentleman agree that stocks of coal can be an appreciating as well as depreciating asset?

Mr. Moore: I take the hon. Gentleman's last point. We should remember that, despite increased imports this year, which were decided on after the bad winter of 1978–79, and the accelerated coalburn decided on by the previous Government, we are still looking to 95 per cent.-plus domestic self-sufficiency, moving to between 96 and 97 per cent. over the next few years. All those interested in coal's long-term future should welcome that.

Oral Answers to Questions — Pressurised Water Reactors

Mr. Lennox-Boyd: asked the Secretary of State for Energy if he has considered what terms of reference he will give to the inspector conducting the public inquiry for the first pressurised water reactor, in the event if its being granted safety clearance by the Nuclear Installations Inspectorate.

Mr. Norman Lamont: No decision has been taken, but my right hon. Friend and I have made it clear that the inquiry will be full and thorough.

Mr. Lennox-Boyd: Does my hon. Friend agree that the public inquiry will be unusual, because it cannot take place unless and until the pressurised water reactor has been given qualified approval by the Nuclear Installations Inspectorate? Does he accept that it will undermine the authority and standing of the inspectorate if its findings are able to be overruled at the inquiry?

Mr. Lamont: In a sense, that is right. Preliminary safety work has to be done by the Nuclear Installations Inspectorate, which has an enormous job. It is having a tremendous burden of work put on it.

Mr. Maclennan: What is the target date for the completion of the public inquiry?

Mr. Lamont: I do not have a date for completion, but it is the Government's intention and belief that we shall be in a position to start the inquiry in 1982.

Oral Answers to Questions — British National Oil Corporation

Mr. Eggar: asked the Secretary of State for Energy if he will make a statement on the future of the British National Oil Corporation.

Mr. David Howell: It is the Government's intention to give the British public an opportunity to share the benefits of the nation's oil wealth through the creation of a revenue bond scheme linked to the fortunes of specified BNOC fields in the North Sea. Details of the scheme and its timing will be announced soon. We also propose that the forthcoming legislation on the future of the corporation should contain powers to enable the public to have a direct equity stake in BNOC's North Sea business.

Mr. Eggar: I welcome that statement, but is my right hon. Friend aware that many of us on the Government Benches regret that the Government will not be selling equity in BNOC in the immediate future? Why is that?

Mr. Howell: The revenue bonds will make available a stake in the fortunes of the North Sea to thousands of people who do not normally deal in stocks and

shares. I hope that the whole House will welcome that. With regard to a minority equity stake, while the Government believe that it is necessary to keep control of BNOC, we intend to take those powers although there are considerable complexities to be unravelled before such powers can be put into practice. I look forward to my hon. Friend's support when we bring such measures before the House.

Mr. J. Enoch Powell: What control or influence over the policy and management of the corporation will the owners of the bonds as such be given?

Mr. Howell: The owners of the bonds will not have an ownership stake in the corporation, but they will share in the risks and revenue of the North Sea. I do not see anything against the idea of thousands of families sharing in those risks.

Mr. Forman: Is my right hon. Friend aware that, although many of us welcome the cautious and measured way in which the Government have approached the matter, we want the units available in the bonds to be as small as possible in order to make a reality of popular capitalism?

Mr. Howell: Those views will be taken into account. It is desirable to spread the involvement of popular capitalism. I understand the views of Labour Members and their extreme hostility to wider ownership in any form.

Dr. Owen: Is the right hon. Gentleman aware that if he needs to issue "granny bonds" as the price of a U-turn we shall be happy for as many as possible to be issued? However, does he realise that if he goes ahead with legislation to introduce a private equity stake in BNOC he will open up for debate all the major questions of principle and of great international importance relating to the United Kingdom continental shelf? In addition, doing that simply as a fig leaf to placate some of his discontented Back Benchers will be playing around with one of the most central issues of energy policy in this country. If the right hon. Gentleman does that, it will be opposed, and opposed vigorously, and it will do no good to our national interest. Will the right hon. Gentleman also let us know whether he intends to allow the BNOC to develop the Clyde oilfield, or whether he


intends to interfere in the development of that field?

Mr. Howell: No decision has been made on the Clyde development, although I have indicated that as part of our depletion policy there will be delays on developments in certain cases. As to the right hon. Gentleman's lecture on North Sea oil policy, I suggest that he reserves that for the debates that we shall have in the House. I think that he is aiming at the wrong target. If there were a proposal to do away with Government control of the BNOC, some of the right hon. Gentleman's worries might be outstanding. As it is, our proposals do not raise the worries on which he has lectured us, though no doubt we shall hear that lecture again.

Oral Answers to Questions — Energy Prices

Mr. Hardy: asked the Secretary of State for Energy if he will meet leaders of British industry to consider comparison of energy prices in the United Kingdom and in countries which are major competitors of the United Kingdom.

Mr. David Howell: Yes, Sir. When I met the CBI representatives last week they told me that it would be a few weeks yet before their report on comparative international energy prices would be ready.

Mr. Hardy: Does the right hon. Gentleman accept that the share of energy costs in industry's total costs is far more significant than he seemed to recognise in the House before the recess? He may not have seen the total figures, but is he aware of the evidence compiled jointly by the public and private sectors of the steel industry, which demonstrates that we pay far more heavily for steel than do our European competitors? Does not that evidence more than justify the U-turn that everyone, apart from the Secretary of State and half his colleagues in the Cabinet, perceives to be necessary?

Mr. Howell: For energy-intensive industries, energy is, by definition, a substantial cost. As we have moved into an era of high-priced energy all over the world, industries that use a lot of energy and cannot employ devices for greater energy efficiency without major new investment obviously face considerable

difficulties. No one can question that. At my request, the electricity supply industry is reviewing the whole bulk supply tariff system. That will cover the position of large users. Overall on electricity supply, the CM has told me in preliminary talks that it does not think that there are major worries in comparison with other European competitors. Of course, I recognise that comparisons with North America are a different thing.

Mr. Michael Morris: Is my right hon. Friend aware that although his Department may consider United States' prices to be another matter, they are a strong competition to British industry? May we have an assurance that when we have a response to the CBI report it will take into consideration the energy and fuel prices in the United States?

Mr. Howell: My hon. Friend and I do not have to await the CBI report for me to recognise the extreme seriousness of the American and Canadian subsidised oil and gas prices, which are causing major damage to the whole of Europe—it is a Europe-wide problem—and exacerbating world energy difficulties. My right hon. Friends and I have been pressing the American and Canadian Governments continually for some time, and we intend to go on doing so with increased vigour, because these are serious and damaging policies for the whole of Europe.

Mr. Dobson: When the British part of the figures has been prepared, will the right hon. Gentleman ensure that the figures comparing the AGR production costs of electricity with coal-fired production costs include an estimate for the three much-delayed stations, which have not worked and which have cost so much, and are not based only on the rather misleading and fraudulent figures of the one station that the CEGB has managed to get to work?

Mr. Howell: The hon. Gentleman is trying to get in a point that is related to another question. Other nations have a larger nuclear proportion in their electricity supply systems, and as nuclear electricity has so far proved cheaper that is a considerable advantage to those other countries. That makes the case for a larger nuclear element in our electricity supply.

Mr. Moate: If the CBI demonstrates that particularly the heavy energy using industries are bearing a much heavier energy cost than our Continental competitors—a fact that my right hon. Friend seems consistently to have denied—what powers have the Government to intervene, and how quickly will they intervene in what is an increasingly urgent matter, particularly for the steel, paper and board and other similar industries?

Mr. Howell: My hon. Friend is not correct in saying that the facts have been consistently denied. I have always recognised that in certain energy-intensive industries there are particular problems. We are waiting to receive from the CBI the evidence of specific firms—not even industries generally—that are in difficulties. It appears that industrial gas prices in Continental Europe are moving ahead fast. Indeed, they are moving ahead of British prices. There have been complaints about oil product prices in the United Kingdom market, and when I have more specific details I shall raise the matter again, as I have already, with the oil industries to find out whether they can maintain fully competitive prices for their refined oil products. I understand that for most oil products they are competitive, though there may be some higher prices here for heavy fuel oil.

Oral Answers to Questions — PALACE OF WESTMINSTER

Mr. Greville Janner: asked the Chancellor of the Duchy of Lancaster whether he can now arrange a date for work to begin on repairing, restoring and cleaning the Palace of Westminster, and in particular to ensure the safety of the structure.

The Chancellor of The Duchy of Lancaster, Leader of the House of Commons and Minister for the Arts (Mr. Norman St. John-Stevas): My right hon. Friend the Secretary of State for the Environment is considering the Services Committee's fourth report—1979–80—of the survey of the stonework. He has agreed that urgent repair work should go ahead. The timing of a major stone cleaning and repair programme depends on the availability of funds.

Mr. Janner: Is it not poor economy to allow the Palace of Westminster to continue to decay, when every year that goes by multiplies the cost of putting it

right? When will the right hon. Gentleman conclude his consideration of the Select Committee's report and start work?

Mr. St. John-Stevas: That is a matter for my right hon. Friend the Secretary of State for the Environment. I am not responsible for the programme. Questions should be addressed to my right hon. Friend.

Mr. Janner: What about the arts?

Mr. St. John-Stevas: It is not a matter of arts. It is a matter of the structure of the building. All apparently dangerous stonework in areas in regular use has been removed, and the work already approved by my right hon. Friend who has responsibility in this matter should ensure that the external structure is safe.

Mr. Bruce-Gardyne: Does my right hon. Friend look in occasionally on the Palace of Westminster during recesses? If he does, does he agree that one often finds the whole place being torn up by the roots? Is it not about time that our unfortunate constituents who are taxpayers should be stopped from being taken to the cleaners every time we leave this place? Should not the redecoration and reorganisation that occurs every time we go into recess also be put into recess?

Mr. St. John-Stevas: I shall pass on that observation to the appropriate quarter, but a certain amount of renovation for wear and tear, particularly in places such as the Division Lobbies and the Staircases, is necessary.

Oral Answers to Questions — HOUSE OF COMMONS

Oral Answers to Questions — Select Committees

Mr. Robert Atkins: asked the Chancellor of the Duchy of Lancaster if he is satisfied with the provision of accommodation for the new Select Committees.

Mr. St. John-Stevas: Yes. Five additional Committee Rooms were brought into use in April last.

Mr. Atkins: Does my right hon Friend agree that, even allowing for the increased number of Committee Rooms, the pressure of Select Committee meetings on the meetings of Back-Bench


groups on both sides of the House is causing considerable annoyance, because of the cancellation at short notice of meetings in rooms that have been booked? What will he do about it?

Mr. St. John-Stevas: As we all know, there is a general shortage of accommodation in the Palace of Westminster. One has to arrange a system of priorities within limited resources. Of course, the ultimate solution is the provision of a new building, but I am afraid that that is unlikely to occur in the foreseeable future.

Mr. Ernie Roberts: Will the right hon. Gentleman look at the problem, which has been raised with him right from the beginning of this Parliament, of the conditions under which many right hon. and hon. Members, especially on the Opposition side, have to work in this House? They are worse than many workers in industry have to put up with, and that is saying a lot. If conditions of this kind operated outside in private industry, action would be taken by the work force. I ask the Leader of the House to look into this matter and to see that conditions are made tolerable. He will he aware that there are as many as 12 of us sitting in passages trying to do our work.

Mr. St. John-Stevas: That is another aspect of the general problem to which I referred. However, I think that there are disadvantages in every hon. Member being in a hermetically sealed room by himself. For many years I occupied a desk in a passage, and I found that I knew more about what was going on in the House then than I do now.

Oral Answers to Questions — Hours of Sitting

Mr. Dormand: asked the Chancellor of the Duchy of Lancaster if he will now introduce proposals for changing the hours of sitting of the House.

Mr. St. John-Stevas: No, Sir. The Procedure Committee recommended against any radical reorganisation of our hours of sitting. I believe that the debate last year when the House considered this section of the Committee's report showed that this view reflected the general opinion of the House.

Mr. Dormand: Will the right hon. Gentleman make some firm recommendation himself and not keep shuffling the matter on to the Procedure Committee, although I take the point that that Committee must have a view? Does he consider that we conduct our affairs in the most efficient way? Why does he think that every other Parliament in the Western world is able to conduct its affairs in normal working hours?

Mr. St. John-Stevas: The Procedure Committee has considered this matter, and I gave the House an opportunity to put into operation the principal change that was recommended, which was about Friday morning sittings, and the House passed that. As long as there is a substantial body of hon. Members, who are opposed, for example, to morning sittings. I do not think that it is possible for them to be enforced against hon. Members' wishes.

Mr. Fletcher-Cooke: Will my right hon. Friend look again at the question of Friday morning sittings as they affect Government statements? Does he agree that the experiment of interrupting the proceedings at 11 o'clock for Government statements is not satisfactory either to Ministers or to hon. Members, and that it would be better if the House met at 10 o'clock, if 9.30 be too early for Ministers, when perhaps statements could be made more easily?

Mr. St. John-Stevas: The purpose of interrupting the proceedings at 11 o'clock is not for the convenience of Ministers. It is for the convenience of hon. Members, especially with Private Notice Questions, and so on, so that they may have time. I shall consider my hon. and learned Friend's suggestion, but I doubt whether it would be satisfactory. I think that it would create more problems than it would solve.

Mr. Gordon Wilson: Will the Leader of the House look at the Sessional arrangements? Does he realise that the House rose this year on 8 August and that children of Scottish Members, including my own, went back to school on 13 August? Does he agree that for those hon. Members who are away from home for most of the year it is at least desirable


that the House should so arrange its business that they manage to see their children?

Mr. St. John-Stevas: Yes. I have some sympathy with what the hon. Gentleman says. It is partly in my hands, I agree. I hope that we shall have a lighter legislative Session. But it is also in the hands of hon. Members. I hope that they will facilitate the legislation that the Government produce.

Oral Answers to Questions — Televising of Proceedings

Mr. Whitehead: asked the Chancellor of the Duchy of Lancaster if he will bring forward proposals for the televising of the proceedings of the House.

Mr. St. John-Stevas: This is a House rather than a Government matter. If it were the general wish of hon. Members to consider this question again, I hope it would be possible to arrange for a further debate on the issue.

Mr. Whitehead: Is the Leader of the House aware that in each of the last four Parliaments there was at least one major debate on this principle? As this Parliament is now drawing to the evening of its days, will the right hon. Gentleman undertake that, before this Parliament comes to the end of its days, we shall have a major debate on this principle?

Mr. St. John-Stevas: I should have thought that this Parliament was in the first flush of dawn rather than in the last rays of the setting sun. I have indicated in what I have said to the hon. Gentleman that if there is a clear demonstration that a large number of hon. Members wish this to be discussed again we shall provide time for a debate.

Mr. Moate: Before considering televising Parliament, should not the House consider whether the sound broadcasting of Parliament has been a failure or a success? To assess that, will my right hon. Friend arrange for the publication of figures showing the total amount of sound broadcasting that takes place and the total cost to all the parties involved?

Mr. St. John-Stevas: I shall look into those questions. It is my opinion—and there may be other opinions in the House—that, on the whole, the sound broadcasting of our proceedings has been a success and has given people listening to

it a much better idea of the House of Commons than they had before.

Oral Answers to Questions — GOVERNMENT INFORMATION SERVICE

Mr. Robert Atkins: asked the Paymaster General if he has been satisfied with the effects of Government publicity arrangements during the summer adjournment.

The Paymaster General (Mr. Angus Maude): Yes. I am satisfied that Ministers have taken every opportunity during the Summer Recess to explain Government policies.

Mr. Atkins: Does my right hon. Friend agree that during the Summer Recess clear evidence became available that the connection between excessive wage settlements and unemployment began to get through to those working on the shop floor?

Mr. Maude: Yes, Sir. There is clear evidence that a number of groups of workers, in the engineering industries especially, understand that excessive wage settlements lead to a loss of jobs. Recent opinion polls also show that a great majority of British workers understand that. I am satisfied that it is due partly to the activity of Ministers in explaining the situation that the change in opinion has come about.

Mr. Skinner: Has the Paymaster General any estimate of how many moles there are in the various Government Departments? If he cannot tell us. will he admit that it is a secret?

Mr. Maude: I do not think that we have as many moles as there are in the Labour Party during the leadership election.

Mr. Marlow: During the Summer Recess my right hon. Friend let it be known through the press that he was about to launch a massive propaganda campaign on the subject of Europe. If he intends to do that, will he restrict himself to the facts about Europe, rather than trying to sell the public an unsaleable product?

Mr. Maude: I did not let anything of the sort be known. The purpose of the Government information service, on this


as on all other subjects, is to provide factual information and nothing else.

Mr. Foot: Does the right hon. Gentleman attribute, for example, the enthusiastic support of the CBI for Government policies to the merits of the policies themselves, or to his own brilliance as a publicity monger?

Mr. Maude: Unlike some Governments, this Government do not try to control the opinions or the actions of private industry. The CBI is entitled to its views, and no doubt it will see the light in time.

Oral Answers to Questions — OFFICIAL DOCUMENTS (DISCLOSURE)

Mr. Teddy Taylor: asked the Paymaster General if he is satisfied with the procedures adopted by the Government information service in dealing with the unauthorised disclosure of official documents.

Mr. Maude: Investigation of cases of disclosure of information is not a matter for the Government information service. It is normally the responsibility, in the first instance, of the Minister in charge of the Department in which the leak occurs.

Mr. Taylor: Will my right hon. Friend say whether the first leaked document, which dealt with the Government's Common Market propaganda campaign, has been reviewed in the light of the Conservative Conference decision, by a 2 to 1 majority, that the Government should concentrate on the facts and not just on

the alleged advantages? In this connection, will he learn from the sad experience of the Labour Party and do all in his power to avoid a damaging confrontation between the conference and the parliamentary leadership?

Mr. Maude: I have said already that the purpose of the Government information service in respect of Europe is to make clear to the British people the economic effects. I am satisfied that if the Labour Party wishes to have a confrontation at the next election on the subject of withdrawal from Europe, the good sense of the British people will defeat it even more handsomely than would otherwise be the case.

Mr. Heffer: Will the right hon. Gentleman explain the distinction between fact and fiction in relation to the sale of council houses? Is it not clear that in relation to council housing the Government have been using the Government propaganda machine for party purposes? Is it not time that that was stopped? If the Tory party wishes to propagate its ideas it should do so, but not by using Government machinery.

Mr. Maude: No, Sir. I regard that as a most extraordinary idea. What the Department of the Environment's publicity campaign has been doing is simply to inform the British people—

Mr. Heffer: No, it has not. It has gone beyond that.

Mr. Maude: —not of Conservative propaganda, but of the contents of an Act of Parliament that the House has passed.

SOUTH KOREA (DEATH SENTENCE ON POLITICIAN)

Mr. Speaker: Private notice question, Mr. Peter Shore.

Mr. John Wells: On a point of order, Mr. Speaker. Can you give the House some guidance about the criteria for getting a private notice question tabled and accepted on a matter for which this Parliament and the Ministers of Her Majesty's Government can have no possible responsibility? If I were standing as a candidate for the leadership of the Mereworth parish council, would my private notice question be accepted?

Mr. Speaker: Order. The House knows that it is not my custom to give reasons why I have called private notice questions. I would say to the hon. Member for Maidstone (Mr. Wells), in passing, that it is not unknown for this House to express its opinion on matters for which Her Majesty's Government are not responsible. Mr. Peter Shore.

Mr. Shore: (by private notice) asked the Lord Privy Seal if he will make a statement on the representations the Government have made to the Government of South Korea about the death sentence imposed on Mr. Kim Dae Jung and now confirmed by the court martial authorities.

The Lord Privy Seal (Sir Ian Gilmour): The Government's concern about the death sentence has been expressed to the Korean Government on a number of occasions, both bilaterally and in association with the other members of the Nine. Although confirmed by the military appeal court, the sentence is subject to further appeal.

Mr. Shore: The House will be grateful to the Lord Privy Seal for that statement. Although there is, as I understand from the Lord Privy Seal, a further judicial procedure, it is extremely important that the views of both sides of the House should be communicated to the South Korean Government. Will the Lord Privy Seal make clear that it is not only the sentence but the whole court martial proceedings that appals us, the flimsiness of the case against the Mr. Kim and, most profoundly, the lurch backwards of South Korea to military and authoritarian rule.

[Interruption.] Will the right hon. Gentleman make plain to South Korea, in whose defence the United Nations, including Britain, was heavily involved 30 years ago, the loss of international support that will follow if this sentence is carried out? Will he discuss urgently with the United States and Japan, as well as with the Nine, how their joint influence can best be deployed to achieve justice for Mr. Kim?

Sir I. Gilmour: As I have already indicated, there is a further appeal to the supreme court. If that is rejected, the president can exercise clemency. The right hon. Gentleman will understand, however, that South Korea is a sovereign State. This is an internal matter for the Korean Government. If the right hon. Gentleman really wants to save Mr. Kim's life—I have no doubt that he does, as I am sure is the case with all hon. Members—he will bear in mind that public pressure is far from necessarily being the best way of securing the objective he has in mind.

Several Hon. Members: rose——

Mr. Speaker: Order. I shall call one more hon. Member from either side.

Mr. Teddy Taylor: Will my right hon. Friend say why he has made representations? Is it because he objects to the sentence? Is it because he feels that the form of the trial was unjust? Having made representations, it will help the House if he says why he has made them.

Sir Gilmour: That may be so. I have already told the right hon. Member for Stepney and Poplar (Mr. Shore) that I do not believe that public pressure is the right way of securing what we have in mind. It will be clear to my hon. Friend that we on the Government side of the House and our allies have a strong interest in the stability of South Korea. We do not believe that the carrying out of the death sentence will be conducive to that stability.

Mr. Dalyell: In contrast to the ignorant interventions from below the Gangway on the Government side, is not the real issue democracy in Asia? Is the right hon. Gentleman, as one of the official delegation from this House to the United Nations last week, aware that there are many delegates from developing


countries in Asia who see this matter as being of crucial litmus paper importance for the advancement of democracy in Asia? Will he ask our delegation at the United Nations—where this matter is our responsibility—to do everything possible to save Mr. Kim's life?

Sir I. Gilmour: We shall consider what further action is appropriate. We shall also be discussing the matter with the Nine. I repeat earnestly that I do not think that conspicuous public pressure is the right way of achieving, the ends that the hon. Gentleman has in mind.

Mr. Bruce-Gardyne: On a point of order, Mr. Speaker. Can you clarify the position? Can the granting of leave to ask that private notice question be treated as constituting a precedent for future purposes?

Mr. Speaker: I exercise my discretion as I think best. What I did is not quoted as precedent. It is not held against me or for me. Private notice question, Mr. John Smith.

Mr. MacLennan: On a point of order, Mr. Speaker. Can you reaffirm that it is the rule of the House that when criticisms of the Chair are to be made there is a way for it to be done and that the manner pursued by the hon. Member for Knutsford (Mr. Bruce-Gardyne), by repeatedly shouting from a sedentary position, which should never have been allowed, is not in accordance with the precedents of the House?

Mr. Speaker: Order. I did not hear the hon. Member for Knutsford (Mr. Bruce-Gardyne). Both sides of the House get excited from time to time about questions that are allowed or not allowed. The hon. Gentleman knows, if he made an interruption, what I think about it.

SEAMEN (INDUSTRIAL DISPUTE)

Mr. John Smith: (by private notice) asked the Secretary of State for Trade if he will make a statement on the 24-hour strike at British ports currently taking place which has been called by the National Union of Seamen.

The Under-Secretary of State for Trade (Mr. Norman Tebbit): This industrial action was taken by the National

Union of Seamen in response to Cunard's wish to operate two passenger ships under the Bahamas flag although crewed by British officers. This decision is a matter for Cunard, but I understand that it is the company's view that it is not possible to operate these ships profitably under the British flag and that the alternative to operating under the Bahamas flag would be to sell the ships. That, according to Cunard, would threaten to make the future operations of the QE2 uneconomic, too.
I regret the reasons which have led to Cunard's decision. They underline the need for all our industries to have internationally competitive labour costs.
I also regret that the National Union of Seamen's action has involved companies with which they are not in dispute and which have no influence in its solution. This has caused considerable inconvenience to the travelling public and has done little to help those companies to remain competitive and to continue to employ British seafarers.

Mr. Smith: As the Minister responsible for British shipping, does the Under-Secretary of State—or the Secretary of State—intend to intervene at any stage in the dispute? Is he not aware that fundamental issues of crucial importance to the British seafaring community are at stake, namely, that if Cunard is permitted to switch ships to flags of convenience many others may follow and countless numbers of jobs may be lost to the British seafaring community? Should not the British Government support the moves at UNCTAD to curtail the growth of flags of convenience, which are, in essence, devices to avoid tax and to lower standards of safety? Should not the Government indicate their deep dislike of British shipowners, such as Cunard, resorting to this disreputable tactic by indicating their view and dissuading shipowners from a course that may lead to continuing trouble in the British shipping industry?

Mr. Tebbit: I have indicated that my right hon. Friend and I share the right hon. Gentleman's concern about these matters. It is not possible to require British shipowners to run ships at a loss. When the right hon. Gentleman parrots the UNCTAD criticisms of flags of convenience, he should remember that many


people in the UNCTAD countries regard the British flag as a flag of convenience. There are many foreign-owned ships sailing under the British flag. The right hon. Gentleman should be more careful in what he says

Several Hon. Members: rose——

Mr. Speaker: Order. This is a private notice question. I shall call two hon. Members from either side of the House.

Mr. Hill: Is my hon. Friend aware that the QE2 operating out of Southampton is the only remaining large passenger ship under the British flag? Is he aware that the Southampton-based crew have already said that they would prefer a private ballot on whether they should lose their jobs for ever to taking part in a temporary strike?

Mr. Tebbit: My hon. Friend repeats some of that which has been published in the newspapers about the views of the seamen on board the Queen Elizabeth 2. It is not for me to speak for those seamen one way or the other. However, I emphasise again that the jobs of all the seamen in Cunard, and any other British line, depend crucially on maintaining our competitiveness with our commercial rivals. A pay rise last year of well over 24 per cent. did little to help maintain that competitiveness.

Mr. Heffer: Is the Under-Secretary of State aware that British seamen in the past received poor wages and worked under poor conditions and that only in the last few years have they begun to receive decent wages and work under decent conditions? Is it not clear that the action taken by Cunard, if followed by other British shipowners, could destroy the advances made by the National Union of Seamen? Is he further aware that many of my hon. Friends who know about seamen and shipping and come from large port areas are fully behind the National Union of Seamen in the steps that it is taking? Is he aware that it is fighting, not only in the interests of the seamen but in the interests of the shipping industry and the future of our seafaring nation?

Mr. Tebbit: I fully expect the hon. Gentleman to be behind the efforts of anybody to pull the plug out of British

shipping by making it uncompetitive with its rivals.

Mr. Marlow: As my hon. Friend said, many companies that are not party to the dispute and that cannot affect the outcome of the dispute are suffering financial loss. What part of the Employment Act which the House passed recently will enable such companies to recover compensation from the National Union of Seamen? If they are not able to recover compensation, will the Government bring forward legislation in future, and if not why not?

Mr. Tebbit: My hon. Friend will recollect from his part in the debates on the Employment Act that section 17 refers to the action which may be taken by companies whose businesses are damaged by unlawful secondary action. It is not for me to decide whether that action should be taken; it is for those who believe themselves to be damaged.

Mr. Clinton Davis: Why does not the Minister pay a tribute to British seafarers, who all too often are taken for granted? Why does he fail to take this opportunity to proclaim the benefits that British seafarers have brought to Britain? Why does he not take this opportunity to condemn a move, which might be mirrored by other shipowners, to take advantage of and exploit seafarers in other countries and at the same time deny British seafarers jobs? Is not the Minister aware that flags of convenience are a shabby device which this and any other Government should expose?

Mr. Tebbit: If flags of convenience are a shabby device today, so they were when the hon. Gentleman was Minister for four years, during which time he did singularly little to change the world's reactions to flags of convenience. Of course I am aware of the contribution which has been and continues to be made by British seamen to the British economy and, indeed, to our life as a whole. I repeat that there is no prospect of requiring British shipowners to operate ships at a loss. The question in this case, according to Cunard, is whether the ships are owned in Britain and whether they have British officers on board and those jobs are saved, or whether all the jobs are lost.

Mr. English: On a point of order, Mr. Speaker. Will you ask the appropriate authorities in the House to consider the questions and answers to the last private notice question? Surely it is common knowledge that our exchange rate is 30 per cent. above what it would be in terms of trade balance or trade competitiveness—

Mr. Speaker: Order. The hon. Gentleman is an expert on our procedure. I fear that he is trying to ask the question that he would have asked had he been called. The value of the pound cannot possibly give rise to a point of order, although it is of interest.

Mr. English: I have a much more serious point to make, Mr. Speaker. To people outside, we seem to be discussing a superficiality. In the context of an enhanced exchange rate, the receipts of Cunard, which are determined by the value that they receive in dollars—

Mr. Speaker: Order. With respect to the hon. Gentleman, we have passed that subject. Unless he has a point of order about procedure in the House. we must move on.

Mr. English: I have a point of order.

Mr. Speaker: I shall be very surprised if that introduction leads to a point of order, but I am willing to listen.

Mr. English: I am sure that it will lead you, Mr. Speaker, to understand that the reputation of the House is at stake. If questions are asked, answers should be given in full. I do not mind Ministers referring to some matters, but they should not omit others, particularly if they might be the responsibility of successive Governments.

Mr. Speaker: I am of the same opinion as I was earlier.

EUROPEAN COMMUNITY (MILK AND PIG PRODUCTION)

The Minister of State, Department of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith): I beg to move.
That this House takes note of European Community document 9280/80 concerning proposals for Council Regulations restricting investment aids for milk and pig production and while welcoming the objective of the proposals to institute useful measures to reduce the cost of the common agricultural policy, particularly in the dairy sector, supports the Government's intention to safeguard the essential interests of United Kingdom producers.
The proposals contained in the document to which I have just referred originated in a much wider package of measures, which first emerged from the European Community Commission in March 1979, just over 18 months ago. The main objective of that package was—and is—to make the existing structural directives more effective and to find ways of assisting agricultural development in those parts of the Community that are too poor for the directives to be of much effect.
The Commission's general policy over the years on agricultural structure has been to encourage capital investments where they lead to increased and improved efficiency on those farms that after modernisation, can reach a level of income comparable to that available in other sectors. This policy has been supplemented by various other measures. Overall, it is a policy that the United Kingdom has felt able to support. We have always held the view that any increased efficiency that might result could contribute to a reduction in the pressure for price levels which are too high to achieve a reasonable balance between supply and demand.
As the House knows, the fundamental problem with which the Community is grappling in the CAP is the tendency for it to produce surpluses. When those surpluses are produced heavy costs are entailed in disposing of them. It is in our interests and those of the Community to achieve a sensible policy, and our efforts in the budget restructuring must be to get on top of the problem of surpluses and the costs that they involve. This is the background against


which we must look at the proposals to restrict assistance to investment in dairying and pig production.
The Commission has been the first to admit that modernisation of farms, in some areas of the Community, has led to an intensification of production. Its concern that structural policy should not increase production capacity for products already in surplus has found expression in its proposal to confine aid to investment in dairying to farmers undertaking a development programme under Directive 72/159, or a farm improvement plan under other common measures. Its proposals for restrictions to pig investment arose from its concern that dairy farmers might turn to pig production as an alternative enterprise, thus creating conditions for an upsurge in production in pig products that would upset the market.
Let me turn now to the proposed restrictions on aid to investment in dairying. These started 18 months ago as a proposal by the Commission to suspend from 1 January 1980 all grant in respect of investments related to the production of cows' milk, with exemptions only for those farmers not increasing their dairy herd and who had at least 35 per cent., of their utilised agricultural area permanently under grass. The discussion was carried forward by technical experts and it pointed up how discriminatory such a proposal would be between different member states. As a result, the proposal was modified to allow aid to continue to those farms pursuing development plans or receiving some other form of aid under Community schemes. The restrictions will not affect all aid paid to dairy farmers, but only specific items related to dairying such as dairies, dairy parlours and dairy cow buildings. Dairy farmers would still be able to receive aid on many other investments that contribute to general farm improvement such as land drainage.
After examination by technical experts, the subject came up again at the price fixing in the spring of this year, and the Council agreed then in principle that, as a contribution to Community efforts to diminish surpluses, aid to investment in dairying should be limited in the modified way I have described, and that even in the case of farmers with a development plan aid should be restricted to that

part of their programme needed to achieve a comparable income for 1½man-work units.
Perhaps I should explain that a farmer with a development plan has a programme of planned investment that over a period of years is intended to raise the income for each of his man-work units to the level enjoyed by others outside farming. In the context of the dairy restrictions this aid would be confined to investments necessary to get to this level of income for the first 1½ man-work nits only.
One has to use the technical phraseology of the Commission proposals, but perhaps I may describe them in more comprehensible terms. Expressed in cow numbers, it was calculated that a farmer would need up to 60 cows at the end of his development plan to have achieved the appropriate income comparable to that of 1½ man-work units. The figure of 60 cows was altogether too low to be acceptable to the United Kingdom, where our dairy herds tend to be much larger. My right hon. Friend pressed hard in the Council for an alternative, and succeeded in getting agreement on an alternative relaxation whereby aid would be given to farmers increasing their herds by up to 15 per cent. In other words, a 15 per cent. increase in an existing herd number would qualify for aid.
The agreement in principle to restrictions was taken as part of the price fixing, and therefore there can be no going back on that principle at this stage. However, I think that all countries agreed that some effort had to be made as a contribution to tackling the problem of milk surpluses. I accept that a measure of rough justice is involved, but we were certainly prepared to accept the arrangement at the time in the light of the modifications that we had achieved to the original proposals and because the 15 per cent. increase in dairy herd numbers recognised the particular problems that our larger farmers would otherwise face.
We therefore hoped that by getting the 15 per cent. increase—although it imposed restrictions on our dairy farmers—across the Community as a whole our dairy farmers would not be put to any relative disadvantage compared with other Community farmers. However, there is some uncertainty about how the provisions of


the draft regulations should be interpreted and implemented on a Community basis. The issues here are how the different elements should interact—the restriction to 60 cows or an increase of up to 15 per cent. of a farmers' herd, and the condition that aid should be restricted to that part of an investment necessary to generate a comparable income of 1½ labour units.
These issues have not yet been settled. They will be discussed at the next Council of Ministers on 10 November, when the Council will have to take a view on them. Those items are, however, still open for discussion now, and we shall be dealing with them in Brussels next week.
Given this background, I hope that the House will support my right hon. Friend in seeking, in relation to the restriction proposed on investment, to get the best deal possible for the United Kingdom dairy farmer in the interpretation that is eventually worked out next week when the Commission's proposed regulations are discussed.

Mr. Douglas Jay: Will the Minister be more specific? I understood him to say that the British Government are not satisfied with the proposals as they now stand.

Mr. Buchanan-Smith: I should like to be able to answer the right hon. Gentleman's question more directly—I am not seeking to evade it—but there is doubt about where the Commission's proposals stand. We must seek clarification on that first. The interpretation of the different standards—a 15 per cent. increase in numbers, and 1½ man-units—has yet to be done. In obtaining those interpretations we want to make sure that, given the larger size of herd in the United Kingdom, our farmers will not be made relatively worse off than dairy farmers in Europe.

Mr. Roger Moate: I am grateful to my hon. Friend for suggesting that he is endeavouring to make these regulations more comprehensible to the House. It is clear from the regulation that the aids will positively encourage a farmer either to increase his herd beyond 60 cows or by 15 per cent. At the same time, are there not a whole host of other schemes designed to encourage that same farmer to go out of dairy production, receiving compensation for the slaughter-

ing of his milk cows? Are we encouraging or discouraging the farmer to increase his herd?

Mr. Buchanan-Smith: With respect, my hon. Friend must distinguish between the two different elements. In relation to trying to restrict the overall surplus of milk production in Europe—an objective that has been supported by both sides of the House—it is true that hitherto we appeared to have contradictory schemes. There were two schemes to encourage dairy farmers to go out of production, and an investment scheme, common across the whole of agriculture, from which dairy farmers as well as other farmers were able to benefit. At the last Council of Ministers' meeting it was agreed that of the two schemes to encourage dairy farmers to go out of production one should be suspended and the other discontinued in the spring of next year. It agreed to remove that element. We supported that because we believed that it was not cost-effective. We are left with one scheme, which, as of now, encourages dairy farmers to expand production in that, like all other farmers, they can qualify for grants to carry out improvements.
In the regulation before the House today we are dealing with a restriction on that scheme which will apply to the dairy farmer but not to other farmers. From that, my hon. Friend will understand that there is no inconsistency in the Commission's proposals. It has removed the two schemes encouraging farmers to go out of production because they were not cost-effective in the use of money.
My hon. Friend asked whether it was consistent to give any encouragement to dairy farmers to expand in any circumstances. That is a fair point. As I said at the beginning of my speech, the objective of the Community structure proposals is to encourage those farmers who are below a certain level of income to invest so as to come up to that level, and to bring the size of their herds and the structure of their farms to a level that will enable them to earn a proper income, so that the smaller farms do not continue to use that excuse for higher and higher pressure on prices. To that extent, the measure is a sensible element that has underlain our own farm improvement and development schemes for a great number of years.
If, in the Community, we use money to try to bring the smaller farms to a better level of efficiency, it is equally fair that the British dairy farmers should not be at a disadvantage compared with those in the Community. That is all that we are seeking to do. I believe that there is a good future for our dairy industry. The farmers have to modernise, and often modernisation involves a modest expansion of some sort. If we achieve the 15 per cent. increase in cow numbers wilt-ten into the restrictions it will put the British dairy farmer in at least a comparable position with his European counterpart.
I apologise for answering my hon. Friend's intervention at some length, but I think that the House will realise that this point is fundamental to the regulation and the way in which we shall approach the issue at the Council of Minister's meeting next week.

Mr. Moate: I am grateful to my hon. Friend for his answer, and also for allowing me to intervene again. He has made a clear case for the regulation. However, I am not clear about the contradictory element in policy. Is my hon. Friend saying that we are no longer pursuing a policy of encouraging the slaughter of milk cows? Has that policy now ended?

Mr. Buchanan-Smith: There are two schemes. One scheme has already finished and the other will finish in the spring of next year. Both schemes are being removed. That has been supported by the British Government because we believe that the money used in support of those schemes did not produce a return comparable to the number of cows taken out of production. It is a separate issue, but I accept that as a policy objective it may have appeared that some contradiction was involved.

Mr. Jay: Are we not at the same time imposing a co-responsibility levy on dairy products, so as to limit production?

Mr. Buchanan-Smith: That is precisely what we are doing. As I said a few moments ago, we are restricting the investment to try to contain the surplus of milk production. The co-responsibility levy is another leg of that same policy. There is nothing contradictory in those two policies; they work hand in hand

together because both are aimed at the objective of restricting the production of milk in the Community.
I turn to the regulation on restricting investment in pig farming. I am glad to say that the position is not quite as complicated as that for dairy farming, where the regulation is still subject to interpretation and must be clarified. We shall do that next week. There are still one or two items outstanding on the regulation relating to pigs, but they are more straightforward. As the House knows, it is not new for the pig farmer to have restrictions on investment in pig production. Restrictions on investment have been in existence since 1972. Currently, aid is restricted to investment that lies within a minimum and maximum capital sum, the current minimum being £8,140 and the maximum £41,263. So there is already that restriction on investment in pig production. There is a further restriction, in that aid is restricted to those holdings capable of producing 35 per cent. of the feeding stuffs required that can be grown on the holding itself and fed to the pigs. In general, pig producers in the United Kingdom have found that they have been able to live with those restrictions, although I know that some would prefer to do without the 35 per cent. feed limit. That is the basic scheme at present, and it is not matter for negotiation. I thought that I should mention it, because it helps the House to understand the existing restrictions.
When the Commission came forward with new proposals to restrict investment in the pig sector its original proposal was to suspend all aid for pig farming, with exemptions only for farms not increasing their fatstock or breeding sows by more than 10 per cent., or those farms that had more than 65 per cent. of their utilised agricultural area under crops—a further underlining of the feed rule that I mentioned earlier. In addition, it was proposed that the financial limits within which grant aid could be given were to remain unchanged, as were the requirement that a farm should be capable of producing at least 35 per cent, of its own feeding stuffs.
As with the dairy regulations, there has been considerable discussion at a technical level. As a result, the proposals have been modified, and an agreement


reached in principle at the price-fixing Council in the spring simply provided that aid should be limited to the volume of investment necessary to reach 550 pig places—not exactly a felicitous phrase—per farm. In other words, it is an actual physical restriction on the number of places that can be provided on a farm.
As inflation has made financial limits unrealistic as a means of control in many parts of the community, the 550 pig places to replace the existing financial minimum and maximum within which aid is to be granted. The proposal replaces the financial standards by a physical standard related to the physical capacity of the holding.

Mr. Tam Dalyell: As a member of the former indirectly elected Assembly's Budget Committee, I know that there were considerable misgivings about the realism of many of the financial limits in the agriculture sector. Has not the time has come for a general review of the system of financial limits, which often leads to the most hideous distortions?

Mr. Buchanan-Smith: I believe that the system has the effect that the hon. Gentleman has described. I hope that he will be encouraged because in this instance the financial limits are being replaced by a physical limit. That sometimes applies even to our own national schemes in various areas—not only economic but including such matters as housing. We have heard in debates how limits of eligibility for certain aids have been left at a certain level and have been eroded by inflation. Many people would like to see them related to physical matters. I am sure that the hon. Gentleman will welcome what is proposed as being a more realistic approach.
We have contributed to the discussion in the Community. We hope that a physical standard can be applied relatively uniformly.

Mr. Peter Hardy: Can the Minister explain the imprecision in the proposals? They appear to talk about 550 pig places. One presumes that those are fattening places. There is no satisfactory or clear reference to the question of the breeding herd.

Mr. Buchanan-Smith: I am grateful to the hon. Gentleman for that informa-

tion. He precisely anticipated the point that I was coming on to.
There remain a number of serious issues still to be resolved—issues that are rather more straightforward than the restrictions on dairy investment. We shall discuss those issues next week. One is that to which the hon. Gentleman referred—the definition of what is meant by a "pig place". Another is whether farmers expanding to more than 550 places will at least qualify for aid for that part of investment that is related to the 550. Those are the two main issues of detail that are still outstanding, and they are important issues.
A third element still to be discussed is the derogation authorising a member State to adjust the pig number in specific cases where 550 proves insufficient to ensure a comparable earned income, because we are still at the earned income level of 1½ man-units. In the Council we shall seek clarification of the crucial matters of pig investment that are outstanding. We shall work to ensure that there is no discrimination against the United Kingdom pig producer and the structure of our industry.

Mr. Leslie Spriggs: I have listened with great care to what the Minister said about the proposals, which have not yet been finalised. He said that further meetings would take place before they were. When the hon. Gentleman returns to the European Minister's meetings will he take great care to protect the British dairy farmers and pig producers, and also do all in his power to protect the British housewife against increased prices?

Mr. Buchanan-Smith: I can give the hon. Gentleman a firm assurance on both those points. The hon. Member for Durham (Mr. Hughes) shakes his head with incredulity and looks very worried. No doubt he will say later why he is so worried. I am glad that the hon. Member for St. Helens (Mr. Spriggs) intervened, because he enables me to end on a happy note my introduction of the discussion of the document.
The restriction on investment aids in dairying is to try to bring about a better structural balance in dairy production in the Community, so that we do not go on producing surpluses that become very costly to dispose of. The restriction on


pig investment is to try to ensure that we do not upset what is a fairly delicate balance in the pig market by people who go out of dairying seeking to transfer to the pig sector.
In both sectors we are trying to keep the correct balance within production in the Community and to contain surpluses. My right hon. Friend and I will have that objective very much in mind in our discussions on those regulations.
We have dicussed many regulations in the past, and I have no doubt that we shall discuss many more in the future. We have constantly to be on our guard, because of the very different structure of agriculture in the United Kingdom compared with some other parts of the Community. We must ensure that restrictions do not discriminate against the producer in the United Kingdom.
It is precisely the points that are still open for discussion—indeed, still open for definition—in both the dairying and the pig sector that I have highlighted today. I hope that what I have said shows our concern and our awareness of the problems.
I hope that my right hon. Friend and I will have the support of the House when we go to Brussels next week to make sure that the restrictions are applied fairly across Europe and do not discriminate against the efficient British dairy and pig producer.

Mr. Gavin Strang: Is there no limit to the trivial gobbledegook in which we are prepared to engross ourselves? When British industry is collapsing; when mass unemployment is at a level unheard of since the 1930s; when there are two economic reports in today's newspapers from authoritative, independent sources that unemployment, although massive, will rise further and more sharply in the year ahead; and when we understand that the Government are deeply divided over whether to implement more policies that they know will increase unemployment further, the people must wonder why we are discussing as the main item of business today measures concerned with limiting EEC aid to milk and pig producers.
I am not suggesting that Parliament should not consider these matters. I shall not dispute the Scrutiny Committee's recommendation that the regulations warrant further discussion. But let us keep the matter in perspective. On these aids in the milk sector, EEC expenditure last year in the United Kingdom was less than £25 million, and in the pig sector it was less than £2 million, although it is difficult to extract these figures from the budget. They compare with about £450 million that the Government are putting into British Leyland, and are very different from the well over £2,500 million that the Government will spend this year on unemployment benefit and supplementary benefit.

Mr. Nigel Spearing: I do not disagree with what my hon. Friend says, but does he not think that what is even worse is that the EEC expenditure on slaughtering cows in this country is—according to an answer to me by the Minister a few days ago—£.19 million? Is not that just as scandalous?

Mr. Strang: My hon. Friend is absolutely right to make that point. The whole position arises because of the chaotic state of the management of the Government's business this Session.
The proposals before us are relatively minor, although I accept that they are important to the producers involved. But the issue that lies behind the proposals is important. That issue is the common agricultural policy. The starting point for any discussion of the CAP must be a recognition that it represents a monstrous misuse of resources and a massive level of expenditure, which does not achieve in any significant way the objectives that its supporters, particularly on the Continent, argue in favour of it.
We cannot help the small producers of Europe by high prices and open-ended intervention. The latest figures for 1980 for the milk sector—the important sector that we are discussing this afternoon—show that the EEC will spend about £3,300 million coping with the surplus. Where does that money go? A large amount is spent on subsidising exports to the Soviet Union and elsewhere at ridiculous knockdown prices, a net transfer of resources from the Community to third countries, subsidising the consumption


of milk by livestock, and the cost of storage. That is not a sensible or efficient way of helping small producers, whether in the United Kingdom, France or Italy. [Interruption.] Hon Members ask why we agreed to it. I assure them that the milk regime long predates the Labour Government of which I was a member.

Mr. Mark Hughes: Will my hon. Friend inform the House when the Council of Ministers agreed to subsidise skimmed milk powder for animal feed, and which Minister agreed to that?

Mr. Strang: The subsidisation of skimmed milk for pigs was authorised by the previous Labour Government. But perhaps I am not making myself clear. I am not complaining about that. I am complaining about the nonsense of the surplus. I am not asking about the measures that were taken to cope with it. I am making the point that the starting point for any discussion in relation to the CAP—[Interruption.] I do not understand why Conservative Members do not recognise the nonsense of the CAP, or how they defend a policy of open-ended intervention that tells producers that the State will buy whatever they produce regardless of how much they produce.
It is not my intention to be controversial. I assumed that my points were accepted by most hon. Members. The CAP is not simply a misuse of resources. It may be argued that if the Prime Minister had been successful in rectifying the budget issue we would at least be getting back as much as we were putting in, but although the Prime Minister and the Government have made some progress in that area we are still getting back less, financially, than we put into the Community.
That brings me to the point relating to the two proposals before us. Because of the structure of our agriculture industry, because our industry has larger units in some areas—which are relatively more efficient—and because the Community has large numbers of small producers in particular areas, measures that cut off aid beyond a certain scale of operation inevitably discriminate against the United Kingdom.
While it is true that, thanks partly to the work of ADAS—it was the previous

Labour Government's policy to get as much as possible out of schemes such as the investment aid scheme—our share of expenditure in this area is relatively high, considering our relatively smaller agriculture industry. But if we continue down this road that benefit will be lost, and even in that area the balance of advantage will be pushed further against us, because fewer and fewer of our producers will be eligible for EEC-backed assistance, a higher proportion of which will go to producers on the Continent.
We should be concerned about this measure, small as it is. I do not wish to go into any further detail, except to say that it is disappointing that a Minister has to tell the House that the proposal is possibly even more restrictive and discriminatory against the United Kingdom than the first reading of the proposal would suggest. It suggests that a dairy producer with more than 60 cows who makes the investment will receive support provided that he does not expand by more than 15 per cent. The Minister is now saying that there is some confusion about that, and that it is possible that no producer with over 60 cows will receive assistance. That is disturbing, but I am glad that the Minister said that the Government would do their best to make sure that the matter is sorted out satisfactorily.

Mr. David Myles: May I ask the hon. Gentleman whether he is following his national instinct or his Socialist instinct? That would be interesting.

Mr. Strang: I see no conflict between my national and Socialist instincts. We are talking about wasted money. No doubt it will be argued in the Council of Ministers that we must be careful about cutting back expenditure on the CAP because of the high level of unemployment that will be created, but if we want to tackle unemployment I can think of no more inefficient way of doing so than to spend thousands of millions of pounds on putting food into store and giving a guaranteed commitment.
The Opposition do not propose to divide the House on these proposals, although we are unhappy about them. We are unhappy about measures that discriminate against investment generally, although there is clearly a case in principle here, given the surplus looked at


in Community terms. But above all we are unhappy to go down a road that means that our share of EEC money towards Government-assisted new investment declines in the future.

Mr. Peter Mills: I welcome the motion, particularly the last part of it, which I support fully, and which
supports the Government's intention to safeguard the essential interests of United Kingdom producers.
It will be very difficult for the Government to do this, and the House ought to support the Minister wholeheartedly in the matter.
The speech of the hon. Member for Edinburgh, East (Mr. Strang) was most amazing. I have been in this House for a long time—for probably too long, some people might say—and I have listened to almost every debate concerning food, agriculture and fishing for many years, but I have never heard such a peculiar speech as the one made by the Opposition spokesman. In the Labour Government he was one of the team dealing with these matters. I remind the House of the word "renegotiation". Has the hon. Gentleman forgotten what happened? The Government of whom he was a member played a role in this. They could have done more and they did not do it. It ill behoves him, therefore, to come to this House with the sort of material which he presented in his speech today.
The hon. Member started by saying that this is not an important matter. Not important? What about all the dairy farmers, the dairy workers and the hundreds of people who work in various dairy plants, as in my constituency, where some of them are being laid off because of a shortage of milk? That is at a time when we are just getting under way for a tremendous drive to export our dairy products into the Community, and when the Milk Marketing Board's export figures amount to £100 million or more. Not important? If the hon. Member comes to my constituency and speaks to my dairy workers in Torrington, he will get short shrift from them.

Mr. Strang: rose——

Mr. Mills: I shall give way shortly, but the hon. Member must take the medicine. I reckon that what he has said will increase my majority at the next election. Many of the people in my area who voted for the Labour Party will probably vote for me next time.

Mr. Strang: I was not, of course, suggesting that the milk industry was not important. On the contrary, it is enormously important. But the hon. Gentleman should look at the figures and talk to some of his producers. They would tell him that if they could get just 1 per cent. off the rate of bank interest it would be a hundred times more beneficial to the industry in terms of cash than these grants will be.

Mr. Mills: With respect to the hon. Member, he has bypassed or forgotten what I said. He has raised another matter; indeed, I tend to agree with him on it.
I hope that the House will not forget what was said earlier by the Opposition Front Bench, especially when we think of renegotiation. The hon. Gentleman has said that these things are not all that important. They are important to very large sections of the rural community.
I said at the beginning that I support the motion, and particularly the latter part of it. The Minister mentioned—I hope that he will not mind my saying this—that these matters are very complicated. They are very complicated. I noticed the faces of some Opposition Members during the Minister's speech. They were confused, and rightly so. But if these matters are so complicated, there will be loopholes which will enable other people in the Community to get round the regulations. The more complicated the regulations, the more the French and others will try to bypass them and work them for the advantage of their own farmers. The Minister should watch this aspect very carefully. Some time ago there was talk of co-responsibility. On that occasion it was the French Government who paid and not the producers. I hope, therefore, that the regulations will not be too complicated, otherwise the French in particular will drive a horse and cart through the whole lot.
A great deal of nonsense is talked by the Socialist Party and by the media about surpluses. I have said this in the


House many times. Of course, we do not want structural surpluses—and perhaps milk comes into this category—but surpluses are not always bad. Sometimes it is good housekeeping to have surpluses. Sometimes it is important to have a surplus in one year in order to deal with the problems of a shortage in the next year.
I bet that the Russian Government would like to have a surplus of grain year in and year out, and a surplus of meat. We have to be very careful—this particularly applies to the Socialist Party and the media—about continually condemning surpluses. We hear talk about butter mountains. It is great stuff to put in the newspapers. We read about powder mountains and milk lakes. I can imagine how the people concerned with these stories would scream if there were no milk on their doorstep or butter on their toast. I can imagine how they would scream if they had skinny babies because there was no milk for them. They would soon be asking what was wrong with British agriculture and British food production.
I am pro-CAP. There are many things wrong with the CAP, but the essential concept is absolutely right. The idea is to enable people to produce food that is necessary, and perhaps to be able to feed other hungry people in the world. We should not be talking all the time about surpluses.

Mr. Mark Hughes: Self-sufficiency is one thing, but if the cost of a 17 to 20 per cent. surplus in dairy products is so heavy that it bankrupts the EEC, does not the hon. Gentleman accept that at that point we have to consider the question rather carefully? Providing butter to the Russians at less than half the price at which it is provided to the hon. Gentleman's own constituents is surely a little difficult to justify.

Mr. Mills: I do not disagree at all with the hon. Gentleman. That is exactly what I am saying. This milk probably comes into the category of structural surpluses.

Mr. Hughes: The hon. Gentleman did not say that.

Mr. Mills: Yes, I did. If the hon. Member will read Hansard tomorrow morning, he will find that that is exactly

what I said. The matter of aid is greatly complicated by having such a tremendous milk surplus. I was simply trying to paint the picture clearly and to show that surpluses are not always bad. Sometimes it is good housekeeping to have a surplus.
On the surface, it looks ridiculous to give aid to producers when we have an overall surplus of milk within the Community. It seems to be a strange policy to add to our surpluses and to lead to even greater problems by stoking up the surpluses and encouraging farmers to produce more. But there is rather a subtle point involved and the Minister has explained it very well indeed. If many of the small and inefficient farmers were brought up to a higher standard of efficiency, the overall end price would not need to be so high. That is the simple truth of the matter.
But it goes much deeper than that, and I want to address my remarks not only to this House but directly to some of our European colleagues. We must point out to them time and again that in the United Kingdom we are not creating the surpluses. We are not upsetting the equilibrium in milk production. The figures released recently show where the trouble lies. In Germany the increase last year was 5 per cent. and in France it was 6 per cent., whereas we shall probably have a minus figure. When the Minister is on the Continent of Europe, he should drive home to the other Ministers the fact that we are not producing the surpluses.
Are the proposals fair to British producers? I do not think that they are. I welcome the Minister's assurance that he will watch the matter very carefully. I hope that he will make the necessary adjustments. In this country as a whole we are producing, I believe, only 70 per cent. of our milk needs. The other countries of the Nine are producing well over 100 per cent. Surely that factor should be taken into account in the negotiations next week. It is fair to say that we are not being treated as fairly as we should be and that we are not producing the surpluses. We are pro-clueing only 70 per cent. of our needs.
I do not want to see any cutback in United Kingdom production. That trend has gone too far already. We have the climate, the grass, the quality stock, the dairy workers and the cowmen. We have an excellent system of distribution and


collection under the Milk Marketing Board. Our milk factories are first class. In my constituency there is a large plant at Torrington, one of the largest in the United Kingdom. It was an old Unigate factory. It was taken over by the MMB.
Milk production is falling and men are having to be laid off. That is crazy when we are producing only 70 per cent. of our requirements and our export of dairy products is getting under way so well. I do not want to see more unemployment because of a further cutback in milk production. It will be a disaster if the present trend continues. If falling production in the United Kingdom continues, there will be less milk available for manufacturing, which is essential if we are to maintain our export drive.
The Minister has rightly been asking us to be export minded in a variety of food products. He has been urging us to seize the opportunity in the same way as the French. If we weaken our production and reduce it, we shall not be able to fulfil what we want to do, apart from lowering the profitability of British farms and making it impossible for British dairy farmers to pay the wages, and the increased wages, that are needed for dairy workers and others.
I understand the dilemma. We must accept that we are in the Community, that we must not seek always to exempt United Kingdom producers and that the Minister is one of many Ministers. I accept all that and I realise that there are difficulties. However, the problems that I have mentioned are basic, and I urge my hon. Friend to redouble his efforts to ensure that we are not penalised by the sins of others. That is why I support the motion. We would not have a leg to stand on if we were producing far more than our requirements. We cannot shout too much about grain and potatoes because we are producing more than we require.
I shall suggest some positive measures that we may have to adopt in future. I was amazed when the Opposition spokesman did not advance anything positive to deal with the structural milk surplus and to lead to changes. Are the Opposition barren of ideas? As we look to the future, we should more and more consider national quotas. Some time ago my hon. Friend and I produced

some papers on quotas. Much of what appeared in those papers is worthy of consideration.
If we could obtain a reasonably high national quota, we could protect our farmers and reduce surpluses where surpluses are being created. There is nothing strange about the concept. For example, we have sugar beet quotas, and I see no reason why we could not have national dairy quotas. Such a system would have its disadvantages as well as its merits. I feel that it would be of benefit to the United Kingdom. These issues need to be discussed and considered afresh.
Farmers throw up their hands in horror when the co-responsibility levy is mentioned. I can understand that. In the United Kingdom we are, in a sense, paying two co-responsibility levies, one to the Community and the one that we have always paid to the MMB. The money that is paid to the MMB has been used to publicise milk and to try to sell more of it. That is what should be done with the money. I wish that the Community's co-responsibility levy was used far more to sell liquid milk to the housewives on the doorsteps of every house in France, Germany and the rest of the Community in the same way as in this country. The co-responsibility levy should be used in that way.
I have received a letter from Mr. Tugendhat in which he makes it clear that if a super levy had been created the United Kingdom would have benefited.

Mr. Mark Hughes: That is right.

Mr. Mills: Our milk producers are slightly below 99 per cent. while other producers of the Nine have gone up to 105 per cent. and 106 per cent. If a super levy were introduced, it would hurt them and not us.
That is all right on the surface, but there would be problems. It would be said "Why should British producers be below the levy? Why should we be allowed to expand when we produce only 70 per cent. of our requirements?" In the long term a super levy would not help us, though it would be helpful in the short term. The result of our having had no super levy is that the United Kingdom Treasury will have to pay another £50 million into the Community's


coffers to pay for surpluses that we have not produced. That is an anomaly that needs to be sorted out quickly and carefully.
Between March 1979 and March 1980 3,500 milk producers left the sector. That is a tragedy. The hon. Member for Edinburgh, East shakes his head, but it was a previous Labour Government who caused that to happen.

Mr. Strang: No.

Mr. Mills: I believe that the trend has gone too far. If we are not careful, our agriculture will get out of balance. More and more farmers are going out of stock farming. More and more are going out of dairy farming. More and more are producing cereals. It is getting topsy-turvy. I remind cereal producers—I declare an interest as I am one of them—that if we do not have a market for our grains, for example, to feed to dairy cows or pigs, we shall be in real trouble. I warn the Minister, the House and the Community that agriculture will get out of balance if the number of dairy producers now going out of business continues.
Over the years, and before this Administration came to power, we have been witnessing the collapse of the pig industry. We did not hear very much from the hon. Member for Edinburgh, East about the industry. Who caused its collapse? It is as well to remind the House and the country who did.

Mr. Hardy: indicated dissent.

Mr. Mills: It is no good the hon. Gentleman shaking his head. He must hear the facts of life.

Mr. Hardy: Does not the hon. Gentleman recall that when the Labour Government took office in February-March 1974 they saw a completely demoralised and depressed pig industry? The first action they took was to introduce a pig premium scheme. When the cycle changed again and pig producers faced misfortune, that Government sought to introduce a similar scheme. They were prevented from doing so by the Community. That refusal was greeted not with dismay or sadness by Conservative Members but by choruses of amusement and enjoyment.

Mr. Mills: The hon. Gentleman has got it quite wrong. If one considers the production figures for the period of the last Conservative Administration, one will find that they all increased. They have now begun to fall.

Mr. Hardy: Not true.

Mr. Mills: Has the hon. Gentleman forgotten the MCAs? Has he forgotten the damage done because there was no devaluation of the green pound? As there was no devaluation of the green pound, the right hon. Member for Deptford (Mr. Silkin) had to bring in a subsidy of 50p per score. The House, the country and pig producers must not forget the role that the Labour Party played in destroying the pig industry. When the Conservative Party came to power, it devalued the green pound. Unfair competition is coming to an end. We face a tricky problem which the Minister will have to watch most carefully. The more complicated the situation is, the more fiddles there can be. Watch it, Minister!

Mr. Peter Hardy: I am tempted to take up the suggestion made by the hon. Member for Devon, West (Mr. Mills) to the effect that we should not adopt a partisan approach. As the hon. Gentleman said, he has been in the House a long time and as the years pass he seems to prepare his speeches less carefully. What he thought to be a nonpartisan speech became, as the minutes passed, excessively partisan. His description of pig production was a travesty. In a previous Conservative Administration, the hon. Gentleman was a Minister in the Department of Agriculture, Fisheries and Food. He seriously misled the House when he suggested that the pig industry was doing superbly in February 1974. Pig producers were in a state of demoralisation and despair.
I remember meeting pig producers in my constituency in March 1974. They were gratified when the Labour Minister introduced his scheme. It greatly assisted them, and within a few months the price of pigmeat had improved. I also remember meeting Yorkshire pig producers on the day that the pig price reached £6·42 a score. That gave them great hope. Various economic forces then depressed the position, and when the previous


Labour Administration sought to assist they were prevented from so doing by the Community and by the action of some of our partners. Unfortunately, Conservative Members were not as non-partisan as the hon. Member for Devon, West and his hon. Friends would have us be now.

Mr. Peter Mills: What about the MCAs?

Mr. Hardy: I recognise that the question of the MCAs was difficult. The hon. Gentleman will recall that I sometimes participated in debates on agriculture and spoke about the interests of pig producers. I agree that pig production in Britain was badly hit as a result of those actions. A recovery could now take place. When the Europeans talk about discouragement, decline and limitation, I become suspicious. It would be unfair if Britain were to be limited in its recovery as regards pig production. It would also be unfair if the Europeans were to adopt an unhelpful attitude towards dairy production.
Concern has already been expressed about the principle behind the CAP. If the CAP is to contain any wisdom, it will have to demonstrate to Britain and to the rest of Europe that it contains sensible priorities. I am not a farmer, although I have long been interested in agriculture. One of Britain's principal resources is its grasslands. The Community should regard Britain and Ireland as the principal grassland producers. Any development in the CAP that inhibited the recognition and use of that grassland would be contrary to the interests of Britain and, in the long term, would not help the Community.
I hope that the Minister will secure a sensible interpretation of the proposals as regards the expansion of our herds. We must achieve the balance to which the hon. Member for Devon, West referred. That is important, because as the Government pursue their silly policies, as industrial employment disappears and as great swathes of havoc are wreaked on our traditional industries, agriculture will become more important. When oil—which is partly responsible for the destruction of British industry—has gone, agriculture may be the only remaining asset. It behoves the Conservative Administration to be more careful than the

previous Conservative Government of 1974, of whom the hon. Member for Devon, West was a member. They should remember the destruction of hope that took place in the dairy industry and the damage that they wreaked in pig production.
One thing bothers me. Successive British Governments have been remarkably careful, cautious, prudent and docile in their interpretation of the regulations. Perhaps the Conservative Government will be a little bit more of the buccaneer than we have so far seen. I doubt it. Given the present plight of our economy, the Government should be more privateering in their approach to Europe.

Mr. Harold Walker: "Privateering" is an unfortunate word.

Mr. Hardy: I would not mind the "sense of enterprise", the "spirit of adventure", and the rest of it, but, as my hon. Friend knows, very little is possible in the industrial sector. Indeed, tractor manufacture in Doncaster is being assailed as a result of the Government's economic policies. If the Government were to show some energy and were to make some imaginative approaches towards the European regulations, my right hon. Friend's constituency and mine might derive some benefit.
The House will shortly consider other EEC documents on agriculture. The documents before us today, and those that the House will consider, give rise to great concern. There are several complicated proposals before us, and later we shall consider others. I spoke to a farmer in my constituency whom I have known for many years. He is an experienced and extremely intelligent man. He has been studying France with great interest. A few weeks ago he visited a French egg-packing station. The farmer noticed that the French egg-packing station was labelling last week's eggs with next week's date. That is serious. Although I do not wish to mention his name, I am happy to give it should it be required, and he is willing that I should give his name to the Minister.
Britain observes every dot and comma. We are always obedient. We are the only member State to behave like that. As a result, people take advantage of us. We can no longer afford to be in that position. I hope that the Minister will ensure not


only that the definition of "pig" or "pig place" is rapidly agreed to the benefit of Britain but that our European colleagues are quickly convinced of the need to pursue sensible priorities. If sensible priorities are pursued, acknowledgment of the importance of the grasslands of these islands is vital. If that is not achieved, there will be a further decline in agriculture and our industry will be ruined. That would be disastrous.
The hon. Member for Devon, West referred to agricultural wages and to the need to promote a return. As I travelled to the House I listened to the car radio and discovered that one reason why farm workers will not receive the awards which perhaps they should enjoy is that farm incomes have fallen substantially this year. That suggests two things. First, farmers may have been disappointed by the Government's failures during the past 12 months. Secondly, given that farm workers cannot receive their awards today, why did they not receive a little more last year when farmers had more at their disposal? I hope that the Minister will bear that in mind should he offer any advice to the appropriate wages board.
I hope that the Minister recognises that it is essential that the Government should pursue sensible agricultural policies. We cannot afford to have nonsense in agriculture as well as appalling dereliction and despair in industry.

5 pm

Mr. John Farr: I congratulate the Minister on the way in which he put the case this afternoon. It seems that he has a certain amount of resolution which my hon. Friends and I hope to fortify in our remarks. The Minister has a considerable battle on his hands. The task is not easy and, as has already been pointed out, there are a number of pitfalls ahead.
Before I develop my argument, I wish to call attention to the appalling condition of the translations of the documents that we are supposed to be able to decipher. If this is the best that the EEC can provide, all I can say is that there is in my constituency a printer who will do the job properly and legibly and for about a quarter of the price without all the appalling blotches and hieroglyphics.
In this debate we are dealing with two absolutely critical British farm products

—dairy products and pigmeat products. These are the only two areas in which, if British farms are to expand at home, there is any potential. In dairy products we are, according to my hon. Friend the Member for Devon, West (Mr. Mills), 70 per cent. self-sufficient. I thought that it was 65 per cent. In pig-meat we have about one-third deficiency potential.
When the Minister goes to Brussels, it is absolutely essential that in his talks with his counterparts in the EEC he in no way impairs or trammels the possibility for expansion of British farmers in these two vital areas. It does not matter so much in sugar, because we have Third world responsibilities. Neither does it matter so much in beef or potatoes in which we are pretty well self-sufficient. It does not matter so much in cereals either in which overall we are near enough to self-sufficiency. But in pigmeat and dairy products there is still potential for expansion on the farm at home. It is vitally important for the Minister to bear that fact in mind every minute of the day, both in the House of Commons and in Brussels when he is negotiating with our partners. Hon. Members on both sides of the House want to see British farmers close this one-third self-sufficiency gap in dairy and pigmeat products if this is possible.
In relation to the regulations that we are discussing, it is vital to have the interpretation of what the Minister will discuss in Brussels made more clear than it has been. On the dairy regulations, the Minister said that these were still open to interpretation. But it seems to many of us that the proposed Council regulation restricting investment aids for milk production imposes greater restrictions than were intended by the Council in its statement. It seems also that the drafting removes most of the flexibility of the provision for a maximum increase in the herd of 15 per cent. Why has the Minister settled for a figure of 15 per cent.? Should not the potential be there so that we can aim for a higher increase of, say, 20 per cent.? Economic conditions being what they are, a farmer, almost overnight, can be forced out of one commodity and into another. An increase of 15 per cent. is not necessarily the right figure. I should like to see it increased to 20 per cent.
I turn to the pigmeat document. It is not absolutely clear on the definition of a "pig place", but this is absolutely critical. Again, these words should be defined as soon as possible. As the document is drafted, it allows for 550 pig places. That appears to be unfair to the United Kingdom because it would certainly affect United Kingdom producers more harshly than their EEC counterparts. It is vitally important to let United Kingdom producers expand so that they may have a chance to close the gap between present home production and self-sufficiency.
The dairy document provides for an increase in the maximum number of cows—more than 60 cows or 15 per cent. The pigmeat document provides for a maximum of 550 places. Perhaps the Minister could incorporate a percentage increase there as well so that the larger pig producers in the United Kingdom will not be prejudiced by the size of the herd.
I should like an assurance from the Minister that, if the figure of 550 is agreed and a producer has 600 pigs, he will not be debarred from a grant in total. I want an assurance that he will get grant aid on the first 550 pigs even though he would not qualify on the balance.
I want to stress the importance of the theme of self-sufficiency. As I said, in a number of products there is no room for expansion. I do not wish to see great expansion in sugar because we have commitments to the Third world countries to allow their sugar in. In pigmeat and dairy products we still have potential for home expansion. We are not self-sufficient in pigmeat or milk products to the tune of 30 per cent. or 35 per cent. When one takes account of the fact that last year we had a deficit of £3,000 million a year in our general balance of trade with the EEC, and compares it with a surplus of £200 million in 1970, one sees how vital it is to fill the gap in these areas, not only to assist British farmers to expand and to give them hope for the future but to help our country generally in its grave economic problems and its balance of trade with the Community. It is staggering that we have dropped from a surplus in 1970 to a deficit of £3,000 million. We

can do a little to help by allowing people to produce more of those two commodities at home.
I hope that the Minister will keep my remarks in mind when he is talking to his Community colleagues in the next few days. I support the proposals.

Mr. Wm. Ross: As I listened to the speeches of some hon. Members I wondered whether they had forgotten the title of the motion:
Proposed pig and dairy restrictions.
The intention behind the Community documents is to restrict EEC output of pig and dairy products. Some hon. Members appear to believe that the measures can help to increase production. However, a definite effort is being made to cut down total EEC production, including that of the United Kingdom.
The effort should be directed to dealing with the Continental structural surplus, which is none of our affair. It has its roots in the small farms on the Continent, where the farmer cannot make a living in anything other than the intensive production involved in poultry, pig and milk products.
The motion states that the Government's intention is
to safeguard the essential interests of United Kingdom producers.
However, the surplus in the EEC is not evenly spread, and even within the United Kingdom production is not evenly spread. There are peculiar regional problems, especially in my part of the United Kingdom, as the Minister knows. The proposals will have an adverse effect on producers in those areas.
The United Kingdom has a deficit in the two products. What case is being made in Europe for a reduction in the United Kingdom production? Long ago the battle was lost. It was lost with regard to milk on the day that we accepted the co-responsibility levy. By that we admitted that we must shoulder part of the burden for overproduction on the Continent. As a representative of the British people and as a farmer, I cannot accept that. United Kingdom production is efficient and helps our entire economy. Since we accepted that responsibility, Ministers have one hand tied behind their


backs. That is not a reasonable way to proceed over these proposals.
We cannot allow production in this country to restricted. It will not help the producer or the country. By accepting the draft document, we will deny producers just below the limit the necessary economies of scale and specialisation. That will apply especially to the producer with 40 or 50 cows who wants to replace equipment.
When a farmer has to replace equipment he chooses more up-to-date and efficient equipment. I remember hand-milking in the smaller farms. Such farms either vanished or installed milking machines. The next step was to install a milking parlour. Today we have the rotary parlour. The more efficient milking machinery the farmer chooses, the higher the cost. It requires massive investment of many thousands of pounds to move from a straightforward milking parlour to a rotary parlour, not only for the equipment but for the stock to make it viable. The proposals will block the young, thrusting farmer who wants to improve his enterprise and become profitable. That is what concerns me.
Therefore, will the proposals succeed and restrict United Kingdom production? Undoubtedly the climate will be less favourable for the farmer wishing to increase his stock. However, at the end of the day it comes down to money. If the enterprise is profitable and it is worthwhile making the quantum leap and paying the bank for the money, the young, thrusting farmer will go ahead.
The entire proposal is a house of cards. It is nonsense; it cannot succeed. Like everyone else, farmers are ingenious. A farmer who has 50 cows will aim for 60, 70 or 80. If he cannot do that honestly, he will find a way around the regulations. The more complex the regulations, the more loopholes there will be, and there will be more people looking for those loopholes and finding them. A plant that is constructed to deal with 50 or 60 cows can just as easily deal with 70, 80 or 90. If a young farmer wants to make money, he has to work long hours. The extra hours spent in the milking parlour are neither here nor there for a few years. He is prepared for that. Thousands of young farmers are doing it.
The Minister said that the proposal concerning pig production was more straightforward. I do not agree. It is much more complex and difficult. Like a cactus, it bristles with problems. In regard to the 550 pig places, what does the term "pig place" mean? By greater efficiency, better quality of stock, buying his pigs a little later or keeping them for a shorter period a farmer may raise his throughput. What standards will be laid down for the size of pens? Can they house 10, 11 or 28 pigs? What is the position with sows, boars or rearing young stock?
The language is inadequate to deal with the complexity of the situation. If the intention is to cut down production, why not set an upper limit for the number of pigs per farm?
What will be the definition of a farm? Will it be a holding restricted to a certain number of pig places, or will there be a definition of a farm business? Will a farmer, his wife and two or three sons all be able to run such a unit? There are so many holes in the proposed system that it is not so much a scheme as a roll of netting wire. I do not believe that it is workable.
The nonsense of the system will become increasingly apparent, and eventually the EEC will have to look for something else. It may turn to other means of restricting United Kingdom production. We already have the problem of the super levy on milk and in Northern Ireland we face the problem caused by the failure to get the Italian levy on grain, which is having a major effect on our pig production.
Is not the most effective way of bringing down milk production to increase the levy on overproduction? If so, why have the Government, the Community and everyone else shied away from that? Why do the Government continue to accept that we, who have a deficit, should pay that levy? Why are the areas of overproduction not squeezed? We do not want to reduce our own production. We need that. We must reduce other people's production. Let us be a little like the French and adequately look after our own interests first.
There are considerable social implications in all this. It is intended that we should create the same income and the same size of farm production per unit.
That is the sort of social and economic engineering on farms which I thought the Conservative Party would not welcome. If there is one lesson from history, it is that imposed sameness cannot work.
Farm incomes are vastly different in every country, for many reasons—climate, land tenure systems, the individuality of farmers, their attitude to life and so on. Seeking to get a sameness of farm incomes would be like trying to get a sameness of income among all the industrial workers in this country. It would be impossible. Too many people forget that farming is not one enterprise but a series of industries with different interests, incomes and needs. Trying to treat them as the same, even with specialised production such as milk and pigs, is the road to nowhere. It cannot succeed.
The practical difficulties have been clearly illustrated in our experience of green money and the MCA system in the Common Market. Those were internal tariffs in what was supposed to be a free Common Market and they made a nonsense of the CAP system. The Government's motion does not solve the problems of agriculture in the EEC, any more than did the internal tariffs.
As always, the Minister was smooth, helpful and willing to make the best of a bad case, but he could not make a silk purse out of this old sow's ear. He tried hard, but he missed the bone of contention of the farmers and the country generally. A proper defence of the interests of our farmers requires a swing back to a national farm policy for our own needs rather than an attempt to look after the national needs of our trading opponents—not partners—on the Continent.

Mr. Paul Marland: I am a practising farmer, and I commend the motion to the House. I support my hon. Friend the Member for Devon, West (Mr. Mills) in his well-merited attack on the hon. Member for Edinburgh, East (Mr. Strang), whose memory seems to be so short. When the hon. Member was at the Ministry a mere 18 months ago, he had the opportunity to do something about the problem, but he seems to have forgotten that and prefers to point the finger at the Government

for everything that appears to be going wrong.
The United Kingdom farming industry is one of the success stories of this country. It never fails to react to any offer, and I am sure that it will react to the new grants in the way that the Government hope. Its record is second to none, whether on output per man, increased productivity, return on capital or anything else. Our farming industry is second to none.
Nevertheless, the ravages of inflation have had their effect on agriculture in this country as in every other country, and I welcome the idea of structuring the grants to physical limits rather than to financial limits. The suggestion that they should be limited to 550 pig places is slightly unclear. I hope that it refers to 550 sow pig places, because if that were the yardstick there might be considerably more incentive for farmers to expand their herds.
The 15 per cent. increase in dairy herds is also welcome. It has been suggested that the limitations would reduce the output from our farms, but the EEC committee that studied the matter said:
The Committee note that any proposals to restrict the benefits to smaller enterprises is discriminatory against the United Kingdom where the farms are generally of a larger size than those of other member States.
There is no thought of restricting output in this country.
There is no doubt that surpluses are in the interests of our people. There would be far more screaming and protesting if there were shortages rather than surpluses. We should look at surpluses as being a good harvest and be glad of that rather than continually being upset by them.

Mr. Wm. Ross: How does a surplus of butter sold to Russia benefit the people of this country?

Mr. Marland: If we have a bad season, there will not be grass available to produce butter, cereals or whatever. We are sensible to maintain a surplus, because if we have shortages the situation will be considerably more serious. There is not a housewife in the land who does not keep a bit extra in her larder or a farmer who does not seek to put more hay in his barn than he thinks he will need


just in case things go wrong. It is a reasonable insurance policy which we should support.
Another aspect of the team who negotiate on our behalf which I welcome is that it is prepared to grip the more difficult problems of the CAP and do something about them. Labour Members have complained for a long time about the CAP, but when the Labour Government had the opportunity to influence it they did nothing. They seemed to specialise in giving away the opportunities of our farmers to those in Europe.
We must put the interests of United Kingdom farmers on a par with those in Europe. It has been said that we are the only country in the EEC that abides by the letter of the law. In many ways, that is something to 'be proud of, but we must seek to ensure that all the other countries act in the same way. We must put ourselves on an equal footing with our European partners. I hope that the Minister will bear that in mind when he next goes to Brussels.
I want, finally, to echo what my hon. Friend the Member for Devon, West said in pointing out the imbalance that could creep into British agriculture. If we do not seek to maintain the prosperity of the livestock sector of our industry, there is no doubt that, little by little, it will go down to such a level that it may not be sufficient to support our people. If that happens, where will our cereal farmers find a ready market for their output? We must seek to maintain the balance between the two sections of the industry.

Mr. Mark Hughes: I apologise to the House in general, and to the Minister in particular, for having had to be absent for part of the debate, the reason being the fact that a certain number of the Minister's constituents are engaged in prison activities in my constituency at present in a most effective way. I wish that the activity of successive Ministers of Agriculture had been so successful in coping with the deep problems of the dairy sector.
When I listened to the hon. Member for Devon, West (Mr. Mills), I became aware of a dichotomy. He is in favour of the common agricultural policy and of British membership of the Community, and yet he says that we should do nowt

about Britain because we do not contribute to the surpluses.

Mr. Peter Mills: We want fair treatment.

Mr. Hughes: The hon. Gentleman said that we should do nothing about Britain because we do not contribute to the surpluses. Part of the difficulty which we found in the Select Committee when we considered dairy products was that we contributed to the gross Community surplus as much by our falling consumption as by our increase in production. We may pretend otherwise, but if British consumption of dairy products in 1978, 1979 and 1980 had held up to the level of 1972, 1973 and 1974, a lot of the Community surplus of butter, for example, would not have been created.
The price that the Community enforces upon Britain causes consumption to fall. The price that the Community offers to farmers is such that the production of milk which cannot be taken off in liquid form but must be used in the manufacturing sector in butter or cheese increases. Ten years ago, about 80 per cent. of British milk was consumed in liquid form. We are now down to 55 per cent.
Any solution starts from one of two postulants. Either the Community has too many cattle, or it has too many farmers who depend for their income on the milk cheque from the dairy that is consequent upon those dairy cattle.
If it is argued that there are too many cattle, at a desperately and wholly unacceptable level the logic is a slaughter policy, preferably resulting from some virulent form of foot and mouth, because that does not cost too much. That is wholly unacceptable. However, if we could reduce the number of dairy cattle producing milk which is in surplus to the order of about 17 per cent. throughout the Community, that would have a marvellous effect on Treasury balances, Community budgets and the other silly things. But it would not solve anything.
If we look at the reality, we see that, by better breeding and better feeding, the ability of the Community dairy herd to increase the surplus beyond that which can he consumed at the ordinary market price within the Community cannot do other than grow. This affects especially, though not exclusively, the Southern Irish


dairy herd. I marvel when I hear suggestions from those who historically are in favour of British membership of the Community that we should go for national quotas. We shall not hold down the Southern Irish to an average yield per lactation of 750 to 800 gallons and quota the Dutch on imported soya and manioc at 1,500 gallons-plus per lactation. That is not the way to reach a decent relationship between potential production in the Community and reality.
We have to realise that the potential production of grass plus imported protein so far exceeds the potential consumption within the Community that the imbalance is permanent, is escalating and is financially and fiscally probably out of control.
There is no point allocating blame as between Commission, Council, this Government, the last Government, or anyone else. We have to realise that, by the mid-1980s, the gross amount of milk produced in the Community will so far exceed the ability of the Community to take it off in the form of cheese, butter, liquid milk or any other product that the Community will be fiscally bust. Politically, its dairy farmers cannot command a respectable vote to continue support at its present level.
That is the crux of the problem. Dairy farmers cannot anticipate political support to be given subsidy from other sectors of the agricultural or non-agricultural economy to keep them in business producing more and more which no one wants and which no one can buy other than with taxpayers' subsidy. The ability of hon. Members such as myself to persuade coal miners and others in Durham that it is right to supply butter to Russia at half the price at which they can buy it is strictly limited. If the market continues to be over-supplied because the price through intervention is too high, we run into that political impasse.
What do we find when we look through the long history of the common agricultural policy? The key is the price fixed on behalf of particularly German but also French feed grain suppliers. It may appear a long loop down an economic chain, but it is easy to raise the price for dairy farmers in the CAP so long as one holds down the feed grain prices.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. I understand that we are discussing an investment programme, not a question of prices.

Mr. Hughes: I accept that entirely, Mr. Deputy Speaker. An investment programme, however, must be geared to profitability. That is the criteria of the investment programmes of the particular enterprise on which one is engaged. To accord with the terms for an investment programme, one must show that within a certain specified time the income per standard man day rises to a particular point. If the input cost of food for cattle goes down, that profitability is reached whatever happens—even if the end price is held constant.
In judging these criteria of investment qualifications and stating that to qualify for this sort of grant one has to achieve a certain income per standard man day, it is essential to recognise that income is affected by the input cost of feed grain. If that input cost goes down, the ability to achieve that standard man day income is materially affected.
While accepting, at the first stage in the elaboration of this argument, that it might appear that I was straying, I trust, Mr. Deputy Speaker, that you will agree that the development of the argument is wholly allowable.
The key to the whole common agricultural policy has been the determination of the relativity between European-produced feed grains and American maize. Successive Ministries of whatever political party have never got to grips with that situation. If the input cost of grain is reduced, providing an upward movement of the green pound, that is equivalent to lowering the costs of the livestock farmers. This might not attract the cheers of some of the barley barons. They are shipping it off to Poland and Russia. I have not seen many of them going bankrupt in the last few years.
I am worried about this aspect of the proposals. I question the premise that the price relativity of milk to feed wheat is sacrosanct. I disagree with this Government as I disagreed with the Labour Government. We have held that price relativity to the detriment of pastoral and livestock farming in the United Kingdom for the better part of 10 years. That has been wholly wrong. When we start to


question that relativity and to say that it is not that milk is at too high or too low a price but that the input of protein and other feed grains into milk production is wrong, we may start to find a solution.
Turning to the social problems, we find that the common agricultural policy has failed totally to inhibit rural depopulation in this country, in France, or elsewhere. The exception, curiously enough, is Bavaria where part-time farming produces curious anomalies. A man whose prime income comes out of the Bavarian Motor Works does not care what inhibitions are slapped on dairy farming. He is doing it not for profit but for joy.

Mr. Deputy Speaker: Order. The hon. Gentleman is stretching the motion rather far. I should be glad if he would come back to it.

Mr. Hughes: I am most grateful, Mr. Deputy Speaker. We are discussing the restrictions on dairy premiums. It is essential, I would have thought, that her Majesty's Government should not agree to an arrangement under which the same restrictions are imposed on British dairy farmers and their sole source of income as apply against BMW workers who are not affected a tuppenny rap.
I conclude, to your great relief, Mr. Deputy Speaker, and that of the rest of the House, by saying that if the Government continue to pursue a policy of price restraint in the dairy sector and continue to support regulations on restricting aid to the dairy sector, it is clear that the other eight members of the Community will have a more profitable dairy sector, will benefit and survive better than the whole of the United Kingdom. I am surprised at the attitude of the Minister of State. The hon. Gentleman knows the figures for Scotland where the fallout from dairy production——

Mr. Deputy Speaker: Order. That is not part of the order before the House. I ask the hon. Gentleman to confine his remarks to the question of investment.

Mr. Hughes: Hardly any dairy enterprise in Scotland can make use of these investment facilities. They are already over the odds. That is why the arrangements under these facilities are disadvantageous to the British dairy industry. The problem is that these arrangements are to the disadvantage of the British

dairy industry precisely because that industry is already so structured that it cannot make use of the arrangements. With the greatest deference to you, Mr. Deputy Speaker, to be told that it is out of order to indicate that this situation hurts the British industry I find a little difficult. I hope that the Minister of State will accept that, in acceding to these regulations in their present form, he will do considerable mischief to the British dairy industry.

Mr. Ian Lang: In order to avoid detaining the House unduly, I propose to confine my remarks to the dairy industry. The hon. Member for Londonderry (Mr. Ross) said that the state of the dairy industry is not the same in all the constituent parts of the United Kingdom. I agree with him. As the Minister confirmed in the House last Thursday, production in England and Wales increased in the last year whereas in Scotland it fell. Estimates of how much it fell vary. In different parts of the country it fell between 3 per cent. and 7 per cent.
In my constituency grass grows best. This year there has certainly been plenty of it. However, with the unduly high rainfall the nutritional content of that grass is somewhat open to doubt. The grass is ideal for fattening sheep and cows and for the production of milk but it is of little use for anything else.
Farmers in my constituency have little room for manoeuvre. However, even there, milk output is falling. Close to despair, the farmers are leaving the dairy industry and switching to beef—perhaps out of the frying pan into the fire.
Returns to dairy farmers are down by about 7 per cent. in real terms compared with last year. In order to restore incomes in real terms to the 1977–78 level, about 6p on a pint of milk might be needed. I hasten to add that I am not asking the Minister for that this evening. However, it illustrates the size of the problem.
In answer to a question on the dairy industry last week the Minister said:
we have done our best to try to maintain incomes."—[Official Report, 30 October 1980; Vol. 991, c. 688.]
I accept that substantial increases in the price of liquid milk have been granted


since the Conservatives came to power. Three price increases have been granted in the last year. However, like Oliver Twist I feel that there is a need to come back and ask for more as a matter of urgency.
In the House last Thursday the Minister said that since May 1979 food prices had gone up by 15·6 per cent. compared with an increase in the retail price index of 25·2 per cent. That is commendable as a reflection of productivity in the farming industry but it also confirms how relatively worse off the industry is, especially when, as I am reliably informed, in the past year farmgate prices have increased by only 4·6 per cent. The dairy industry believes that it has justified the price increase requested in June and that it is needed more urgently than ever. The ½p granted in Scotland out of the 1 ½p September increase was not nearly enough for the industry's needs. Incomes have dropped in real terms year after year. Bank borrowings are increasing year after year, with all the attendant problems of high interest rates.
The chairman of the Scottish milk marketing board, Mr. Robert Lammie, is one of my constituents. He is a wise, sensible and moderate man and yet he was driven publicly to burn the cheque for over £700,000 which represented the July to September quarter of the co-responsibility levy raised in the area for which his marketing board is responsible. He took that action because of the strength of feeling in the industry, that when we are only two thirds self-sufficient sums such as that, drawn off a far from prosperous industry to fund the common agriculture policy, make an excessive demand upon that industry. I do not approve of his action but I understand and sympathise with the strength of feeling behind it. As we contemplate the super levy I ask whether we cannot try to move towards a position where countries are increasingly responsible for disposing of their own surpluses and are increasingly able to react to their own deficiencies.
The Minister recently promoted the slogan "Buy British." That is certainly a good slogan for British agriculture. It helps the farmer by supporting his product and it helps the housewife to whom it commends those products. They are

products of a high quality, in stable supply and available at reasonable prices. How can we urge people to buy British while, at the same time, we are driving down production in an industry which is only two-thirds self-sufficient? "Buy British" might be a good slogan, but "Produce British" is a better one. Unless we encourage that slogan in the dairy industry, soon there will not be much that is British left to buy.
The reduced levy for the first 60,000 kilograms of milk produced in less favoured areas is an almost negligible concession. It is time that we placed the responsibility for co-responsibility levies where it lies. Some hope attaches to the Binder Hamlyn reports on the arrangements for determining the costs of processing and distributing liquid milk in Scotland. I understand that the studies are based upon improving the mechanism for determining the costs, returns and profitability of producers and distributors. I urge my right hon. and hon. Friends, when considering their findings, to try hard to find ways of improving returns to producers.
The situation in the Scottish dairy industry is serious. Productivity and efficiency are unrivalled. I urge the Government to take full account of the present position and to react to it urgently, otherwise, according to the considered opinion of many close to the industry, the industry will have difficulty surviving.

Mr. David Penhaligon: I am not a farmer, but some people say that I sound more like one than many farmers who have spoken today. I rarely speak in agriculture debates, but I listened with great interest to the Minister explaining the European package. I am more used to him explaining fishing issues. I can see now why he likes fishing, because that is simple compared with this topic.
I cannot see how the package can lead to an overall reduction in the production of milk products. That must be achieved in Europe as a whole. I am prepared to defend marginal surpluses, because they are to the general advantage of the longterm sanity of providing food for our people, but no one can argue rationally that a 20 per cent. surplus in milk products can be defended in the long term, year after year.
Just who will reduce his milk production? It has been said that some of the new investment is to increase the efficiency of small farmers in order to reduce the great price push from them on to the whole European market. I can see the logic of that. We understand the situation. The argument is that the price push comes from the small farmers in Europe, and that if we make them more efficient there will be less price push from that direction, but that will also produce a lot more milk. If I misunderstand the logical outcome of the argument, perhaps the Minister will explain. If my understanding is not incorrect, who in Europe will be asked to reduce milk production by about 20 per cent.? Will it be the British, the French or the Germans; the big farmers, the middle-sized farmers or the little farmers? Clearly, somebody will have to reduce his output of milk. I can assure the Minister that we shall argue that it should not be the British farmer, since we are 60 or 70 per cent. self-sufficient.
When the Minister enters negotiations in Europe, on whom does he have his eye? Who does he believe should reduce milk output by the quantity necessary to bring us to a sensible surplus? I imagine that 5 per cent. would be a reasonable aim. If we managed that figure it would be regarded as a triumph—whether that figure is right or not.
The Government can claim to have discouraged investment in Britain with tremendous success in the past 18 months. Rarely have a Government succeeded so well. Perhaps the Minister would care to hand on to his European friends the suicidal way in which that policy can be pursued. The policy is to expose small businessmen to interest rates of approaching 20 per cent. for investment money. That will reduce investment. That effect can clearly be seen in our industrial sector, and the farmers in my constituency know that the same thing is happening in their industry. The fall in British milk production in the past 12 months is probably much more to do with that than with the various changes and machinations of policy that have flowed from the European Community.
I suppose that it would be out of order to raise the case of the farm worker, but

it is a case that must be pleaded. An answer to a parliamentary question last week revealed that the national average wage in Britain is now £124——

Mr. Deputy Speaker: Order. I think that the hon. Gentleman has answered his own question.

Mr. Penhaligon: I should have thought that with a short speech I could have been shown a little tolerance, Mr. Deputy Speaker. There are hardly enough hon. Members here to keep the debate going. However, I have mentioned a certain figure for the average national wage. Farm workers in my constituency constantly talk to me about the investment policies of their farms, with an eye to their securing a greater proportion of the national wealth. When I revealed that statistic to them it produced a response of total and sheer disbelief, a disbelief born of the lack of investment programmes in their industry.
That is a scandal and I am sure that most people wish, more than anything else, that the burden that is imposed upon the farm worker and the rural areas of Britain through lack of a sensible policy could be lifted. The constant excuse that that "cannot be done this year" is just not satisfactory.
I wish the Minister well in the negotiations. I do not see how anyone could oppose the motion. It speaks of the Government's intention
to safeguard the essential interests of United Kingdom producers".
Perhaps the Minister will tell us what are the non-essential interests. We might then be a little clearer about his aims. There is no doubt that the backbone of the rural economy is agriculture. It always will be. Other industries may come and go, but agriculture is always there, and that applies to my constituency and those of the good sprinkling of rural Members who are here tonight. Even if the mining boom that I expect for my constituency is realised, agriculture will still be the backbone of our economy, as it is of the economies of Devon, the rest of Cornwall, Somerset, the Borders of Scotland and elsewhere. An intelligent, long-term investment programme is needed.
I wish the Minister well, but he is probably going to Europe in pursuit of an unattainable policy. I conclude with a question: who on the other side of the Channel does he think will reduce his milk output by the quantities that we are discussing to bring the Community back to a more sensible European surplus?

Mr. Colin Shepherd: I agree with the hon. Member for Truro (Mr. Penhaligon) that agriculture is the backbone of this country. It certainly is in Herefordshire. I was sorry that the hon. Member for Edinburgh, East (Mr. Strang) opened the debate for the Opposition by belittling the occasion. It is an important occasion, and it will be recognised as such within agriculture. The debate has been seen by many hon. Members on both sides of the House as an opportunity to demonstrate the importance that we attach to the subject.
I thought that the hon. Gentleman's remarks were remarkably chameleonesque. It was as though he was trying to merge with the colour of the Tribune group below the gangway. Was the small voice of Blackpool telling him: "You had better get any support for the Common Market out of your head if you want to go places in our party"? I detected a remarkable change in the hon. Gentleman's outlook from when he was the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food.
I welcome the remarks of my hon. Friend the Minister of State. The tactics that he outlined are fully in accord with securing what I should like to see—an equivalence of competition between the United Kingdom milk and pig producers and their Community counterparts. That is most important. It is easy to lose the United Kingdom picture within the totality of the Community. We do that at our peril. The Government are Her Majesty's Government of the United Kingdom of Great Britain and Northern Ireland. They must take into account all aspects of their duties in that respect, bearing in mind the total Community context. Therefore, we cannot fault the Minister's objectives in his approach to the Brussels negotiations.
I echo the fears expressed by my hon. Friend the Member for Devon, West (Mr. Mills) that increased complication within the Community regulations could lead to

more shenanigans, more going round the side and more misinterpretation. We have to be careful that that does not happen, and I hope for effective policing and scrutiny of the regulations as they are implemented.
The United Kingdom national interest and the objectives of our Government must remain to optimise our position within the Community framework. Our best aid for milk and pigmeat producers at present must be the positive MCAs, based on the strength of sterling vis-a-vis the basket of currencies. The value of sterling internationally would not necessarily fall with a reduction in interest rates. The strength of the oil base is far greater than we often think, and we shall retain positive MCAs for a considerable time. We need to examine our approach to the Community negotiations and our position within the Community with that in mind.
Another important factor is that our Minister is the Minister of Agriculture, Fisheries and Food and that the agriculture and food components emphasise the need for an even-handed approach between producer and consumer. So often in the past there has been a balance in favour of the consumer, with the producer appearing to be taken for granted or neglected. Otherwise, it is felt that he is getting too much anyway and, we are asked, whoever saw a broke farmer? We should not sacrifice the producer. That is contrary to the longterm interests of British agriculture.
I welcome the second part of the motion, which emphasises the need for the Government to recognise the requirements of the producer in their negotiations. The consumers have not been served well by the neglect of the producers over the past few years. During the period of the last Administration, food prices rose by 120 per cent. Since May 1979, when the Government came to power, food prices, according to the answers to parliamentary questions last Thursday, have risen by 15·6 per cent., against a 25·2 per cent. increase in the RPI. That is a solid improvement in relative terms. That has been achieved against a background of looking after the producer. There have been two devaluations of the green pound to remove the disadvantage under which the producer was working.
We must recognise the way in which farm incomes have been falling. During the last two years of the Labour Administration they fell distinctly, and the trend has continued. I worry about that. It is wrong for the long-term health of British agriculture, and it is bad for the consumer. I see no joy in the British producer being squeezed out of the market, leaving the consumer with a total dependence on imported produce. It is not good enough.
The support for United Kingdom agriculture expressed by the hon. Member for Rother Valley (Mr. Hardy) is important. It means that all is not lost as far as the Labour Party is concerned. There are elements working in that direction. The plea that he made for British agriculture, especially for the producer, will make it possible, eventually, for the agricultural worker to be paid the amount of money that we want to see paid, but while the producer is screwed down he will not be able to recognise properly the services of the agricultural worker. The consumer must recognise that.
Opportunities are open to us because of the 10 per cent. positive MCA position that we now enjoy. Under the Labour Administration the agriculture industry in Britain was crucified by a negative green pound differential—a negative MCA. We saw imports flooding in. The pig meat industry was crucified. It was not good enough for the hon. Member for Rother Valley to deny that that happened under Labour Government. I recognise and recollect that in 1973–74 British pig producers were feeling the pinch, but that is nothing compared with the expressions of fear that I heard from them during 1976–77, when there was a 40 per cent. green pound differential working against them.
It was not convenient to remember that was it? At that time Danish bacon came into Britain with a £240 a tonne advantage, the MCA was split two ways and our producers were undercut every time they tendered for a major hospital or Government contract, so they did not get the contracts. The Association of Bacon and Meat Manufacturers can underline that, because its representatives came to the House and expressed that point of view.
We now have a positive MCA—10 per cent. We have the advantage, and I want to see it used. I want to see the British pigmeat producers and processors taking this opportunity to move both into overseas markets and the markets in Britain which, traditionally, have been taken by importers, and so push back the tide of imports. Import substitution is within our grasp, and that must be beneficial for Britain—not only for the pigmeat producers and processors, but for the overall balance of payments. That is a real contribution that agriculture can make.
There is an export potential for milk products. When I walked around the markets of Brittany in the summer—just across the water from Plymouth—I carried out my own survey. I could not and a single piece of British cheese on the stalls in the markets, in the shops, in the delicatessens or in the up-market supermarkets. It is important that we recognise that we have a financial inducement to export milk products of that sort, If we do not take advantage of that market, our milk industry will not maximise the potential that it now has on a plate.
The motion says that the House
particularly in the dairy sector, supports the Government's intention to safeguard the essential interests of United Kingdom producers.
That relates not only to the detail of the instruments before us, but to the whole philosophy, and must be taken seriously. Producer incomes have been falling, and we allow that to continue at our peril. Agriculture is contributing to the economy, and we must bolster that whenever possible. We must do so by looking after producers and consumers evenhandedly. That means recognising, sometimes, that it is important that consumers might have: to pay a penny or two more to ensure the continuity of supply.
When we can come to the negotiations for the price review this year, it is important that our Ministers resist any attempts to revalue the green pound, except as part of a package that will benefit British producers and consumers even-handedly. As I indicated, the consumer will not be well served if the producer is squeezed out of business. Ensuring a proper and reasonable return to producers is the best way


to serve both British agriculture and the consumer.

Mr. David Myles: I welcome the opportunity to contribute to the debate, especially as a farmer—though I hasten to add not as a dairy or pig farmer. I sincerely hope that I shall not stray into other fields.
We cannot debate the motion in isolation, because it is part of the strategy of the Council of Ministers to deal with CAP problems as a whole. Many speak of the necessity for CAP reform. Many point out the weaknesses and anomalies in that policy. Many, especially from the Opposition Benches, but not exclusively—where are they now?—want to wreck the EEC. But few propose constructive actions that will be acceptable to the Community as a whole and to our national interest, our agricultural interest and our consumer interest. All those interests are intertwined, and no one can be pursued to the exclusion of any other.
I realise that the proposals are aimed at assisting the achievement of market equilibrium in those sectors, but I doubt whether they will have much effect in isolation. There is great danger in this piecemeal or bitty approach. The CAP faces two crises—a cash crisis and a production crisis. Much of the debate on CAP reform centres on whether the problem concerns the need to limit production or to find new financial resources. The present danger is that the exhaustion of financial resources will lead to the CAP existing increasingly alongside a black market of national aids. I shall return later to national aids.
A striking fact about CAP expenditure is the high proportion devoted to export refunds—49·3 per cent. Hon Members must ask themselves who benefits from those refunds—the farmers, the exporters or the third country to which the exports are directed. Many of the products exported are in a processed or semi-processed state. A high proportion of Community agricultural expenditure is directed therefore not to agriculture, but to industry, or even to third countries.
I wish to draw attention to the fact that export refunds on butter were fixed at 1,630 European units of account until June 1980. They are now 1,000 Euro-

pean units of account. That is possibly a way in which we can reduce the financial requirements.
Given the constraints on the budget, measures directly encouraging the producers to improve efficiency, so that consumers can benefit from a lower cost of production, should be given priority. I therefore question whether as a result of the proposals we shall hit the right target. Although I doubt the wisdom of all capital investment encouragement, there has perhaps been a little too much of that, especially in the area suggested by the hon. Member for Londonderry (Mr. Ross), who spoke of rotary milking parlours. Such machines—great big things—cost a great deal of money. There was Government support for them, but the machines are now being declared obsolete by a large number of producers.
Surely the way in which we must limit the surplus production of milk and milk products is by exposing producers to some extent to the cold wind of market requirements. In other words, responsibility must be imposed—whether or not one calls it coresponsibility—in areas in which surplus production occurs.
I was attracted by the suggestion of my hon. Friend the Member for Devon, West (Mr. Mills) of national quotas—though I would add "related to national consumption". My hon. Friend the Member for Galloway (Mr. Lang) spoke of the burning of the milk co-responsibility levy cheque by the chairman of the Scottish Milk Marketing Board. That is the marketing board in the south of Scotland. We have a different one further north, and that obeys the law. The action by the French Government to which that act related was taken in the last quarter of 1977, when Labour hon. Members had some say in these matters. Since then the French producers have paid their co-responsibility levy as they were required to do.
I must speak of pig production. It is of considerable interest to me, as my constituency at one time was responsible for the production of half the pigs in Scotland. I am glad that my hon. Friend the Member for Hereford (Mr. Shepherd) spoke about the benefit to our pig producers of positive monetary compensatory amounts. Much modernisation has taken place in both the dairy and pig sectors,


but we must ensure that our producers are not disadvantaged compared with our European partners. That point is included in the motion. If sufficient resources are not made available, further national aids will be granted to fill the gap. National aids result in an uncontrolled increase in production.
The size of the present budget, particularly in the dairy sector, can be put down to the effect of national aids. Therefore, it is essential that the Council of Ministers finally has the courage to act to control the competition in national aids, first, by publishing a complete register, and, secondly, by deciding on compatibility with the EEC Treaty.
I share the reservations of my hon. Friend the Minister about the proposals, but I give him the benefit of my confidence in his ability to achieve an agreement that will meet the necessary broad strategy.

Mr. Selwyn Glimmer: I am pleased to have the chance to take part in the debate, because my constituency has perhaps the largest pig herd in the country. Therefore, the contents of the document that we are discussing are very important to my constituents.
My constituency is one of the last remaining really agricultural constituencies. Its largest town has a population of only 8,000. Therefore, the concerns of agriculture are vital, as a number of hon. Members on both sides of the House have said.
The subject of the debate is more than the investment arrangements for the pig and dairy sectors. The motion also asks us to have confidence in the way in which the negotiations will be conducted by Ministers. We should start there, because one of the great sadnesses among the agricultural community concerns the way in which, over a long time, it lost confidence in how the negotiations were conducted. There was a time when the right hon. Member for Deptford (Mr. Silkin) appeared to think that it was a kind of virility symbol to come back from Europe having bashed the farmers. It was a very serious matter that a Government who were hopeless at home at defeating inflation would go abroad in order to kick that one section of the community that did not have many votes in the marginal constituencies that the Labour Party was

determined to keep, though, happily, it failed to do so.
This is a valuable opportunity to say that over the past 18 months we have had a Minister who is both the Minister of Agriculture and the Minister of Food, and that the essential balance between the continuation of supply, the encouragement of the producer and the protection of the consumers' interests has existed.
I am pleased that the motion has been framed as it has, because it is important to say that the agricultural community now feels that it has a ministerial team in which it has confidence. It has a number of things to say to that team, but it is important to start by stating that it has confidence, because at least we are negotiating and discussing within a series of given facts. The farmers and our neighbours in the rest of the Community realise that we are discussing these issues on the same basis as they do—in other words, that we are all members of the Community, that we intend to go on being so, and that we want to find the best answer to the problem facing the whole Community.
That is a totally different atmosphere in which to discuss such matters compared with that which obtained before. There were then members of the Community, on one side, and on the other representatives of the Government, concerned to undermine, undervalue and write down any success that might be achieved within that Community.
Therefore, I take seriously, and not as a polite bow in the direction of my right hon. Friend the Minister of Agriculture, Fisheries and Food, the part of the motion which refers to
the Government's intention to safeguard the essential interests of United Kingdom producers.
This is not a Conservative Party conference motion in which we thank God for whatever department we are talking about; it is a serious statement about a very important change in the atmosphere of discussion in Europe.
Therefore, I find it sad that Labour hon. Members have shown such a remarkably short memory of the situation up to 18 months ago. We have heard not a word of congratulation about the fact that we now have positive monetary compensatory amounts, a change that helps us compared with that long period in


which our industry was driven underground and agriculture used as the one way in which the previous Government could try to have some hold on the progress of inflation.

Mr. Cohn Shepherd: Does my hon. Friend agree that even now the Labour Party wishes us to throw away the advantage of positive MCAs? Does he recall that at Question Time last Thursday the right hon. Member for Barnsley (Mr. Mason) demanded that the positive MCA advantage be thrown away?

Mr. Gummer: Not only do I recollect it: I noticed it at the time because it was the first occasion on which I heard a Labour Member refer to the MCAs in a way that showed that he understood how they worked. That was an advantage, but the suggestion that we should use them against the interests of those who have been sat upon for so long was particularly sad.
The British pig industry is seriously affected by these proposals. We have had a good deal of debate about the industry, without any recognition that these investment proposals are particularly interesting because of the special problems facing our industry in comparison with those of other countries. Self-sufficiency, or partial self-sufficiency—we cannot yet supply all our own needs—is a question not just of production, but of selling what we produce. One of our difficulties is that our industry, which is second to none in quality of production, has not been able to accept, or to impose upon itself, the discipline and marketing arrangements that exist in other countries.
We should therefore consider carefully how encouragement is given, to realise that we have a peculiar difficulty which we must put right ourselves and that putting it right will mean a profitable industry, rather than reliance on outside support. It is only from profits that we shall be able to improve our ability to sell our pigmeat. We should ensure that if the industry is profitable it will be able to expand. Positive MCAs present a great opportunity for the pig industry to expand, and we should encourage it.
In those terms, one problem with the CAP is that we have still been unable to draw a distinction between two very

different ends, and these proposals highlight that difficulty. The CAP tries to do two things at the same time: first, to provide reasonable support for reasonably profitable and economic producers; and, secondly, to provide a "social fund" to help those who will never be very profitable, but who should be enabled to continue to live in rural areas where alternative employment is difficult to find.
In trying to do one of those two things, one often fails to do the other. The balance is difficult to strike. I suspect that we are near the best balance that we can achieve for pigmeat. We shall have almost as good an answer as we can hope for if the Minister can achieve the additional objectives that he has mentioned tonight and the system can offer some safeguards.
Some of the producers in my area are worried about the definition of pig places. That is particularly important in an area such as mine, with a large pig capacity. We are also concerned about one or two other concessions that the Minister outlined and about ensuring that the balance is maintained so as to give some help to the small producer. It is no good pretending that all small producers are on the Continent and should therefore be ignored. Some small producers in this country need help, and this proposal is a move in that direction.
However, there are other problems, which these proposals do not meet. If, as the motion says, we are concerned to
institute useful measures to reduce the cost of the common agricultural policy, particularly in the dairy sector",
I hope that the Minister will see this as the beginning of a process and not the end.
If we are prepared to go this far in compromise, we should encourage our EEC colleagues to understand that since we are prepared to take part of the burden of reducing the cost of dairy products and pigmeat, they must be prepared to take some of the burden in other areas. One area in which they could help is sugar. I hope that that will be borne in mind in the discussions. We must take seriously some disadvantages in the proposed system, which I hope that the Minister's proposals will overcome.
Many of us believe that unless we keep a close eye on investment help to the dairy industry, many new ideas will be latched upon too readily without being worked out in practice. The rotary parlour was at one time the agricultural equivalent of the language laboratory. At one stage no one was able to do without one, yet experience has shown that large sums were spent unjustifiably on these machines.
This is the essence of the problem of agricultural support for farmers' capital expenditure. It is important to ensure that one does not make viable a project that would not be commercially possible without help. We must ensure that the Community does not spend money on encouraging farmers to do things that they would not choose to do on a basis of pure commercial profit. These proposals may help to achieve the balance that will avoid such mistakes.
There are some ancillary problems attendant upon any change in the operation of the CAP. Farmers in this country should not feel that farmers in other member States can use these arrangements to circumvent the rules. We hear a great deal about other people cheating. We sometimes overdo the argument that we are whiter than white, while others are always on the fiddle. We must get confidence in the operation of this proposal, as of all other proposals.
I was particularly worried that, having demanded strict controls to ensure that other member States did not avoid the rules, Labour Members in our recent debate on fishing opposed a common control in that area, with shouts about "foreigners checking on the British". We must ensure that the Community can check on all its members. We must be checked as well if we are to demand that the Germans and French are controlled.
I hope that the Minister will not budge from his determination to see that others keep the rules and that checks are made on everyone. We must not only see that these proposals work but ensure that my constituents have continued confidence in the Community's ability to provide fairly for the needs of agriculture.
No one in this country should be able to say, "We are law abiding and others are not", or we shall see more of what has happened in Scotland, with people

either breaking, or pretending to break, the law of the Community—which is, after all, made by ourselves and our neighbours together. That is not the attitude that we want to encourage. I was sorry to hear some hon. Members, even Conservative Members, suggesting that we should start bending the law in order to parallel other Community members. My right hon. Friend the Minister of Agriculture and my hon. Friend the Minister of State must make sure that they do not fall into that trap. They must do their best to ensure that the control mechanisms are clearly there and that we can all support them in saying that these regulations will be laid equally on the backs of all Community partners.
If we are to do so in that way, we must return to the question of individual national aids. It would be no use having Community control, even if it were perfect Community control, of the Community arrangements if that avoided a close note being taken of the individual arrangements of national aids which some countries may seek to use to avoid the effects of these proposals. It is vital that my constituents should know that they they are on all fours in competition with our neighbours in the Community. If we give that fairness, they will then react and win through. If they think that they are being done down unfairly, my constituents will feel that they are not properly represented in these negotiations at Brussels. I ask the Minister to ensure that the agriculture community will have confidence that the European Community will control and regulate these proposals so that they fall fairly upon all member nations.

Sir Anthony Meyer: I am glad to follow my hon. Friend the Member for Eye (Mr. Gummer), with his impressive grasp of agricultural matters and his obviously close eye on the all-important pig industry in his constituency.
I should like to return to two matters about which my hon. Friend spoke: first, the necessity to ensure that controls are effectively policed, and, secondly, the dual role of the common agricultural policy to ensure a steady level of food production in Europe and to look after the interests of poorer, weaker farmers. There is possibly a third role for the common agricultural policy—arresting the drift off the


land. I shall suggest later that it might become an objective of agricultural policy to encourage people, little by little, to go back to the land.
The hon. Member for Edinburgh, East (Mr. Strang) said that he was surprised that this debate should be held in prime time because it was secondary in importance to other matters. His attitude has been borne out by that of Labour Members, only one of whom has been here throughout the debate, and only three of whom have contributed to our proceedings. The attendance by Labour Members has not been marked, as is usual for debates on agriculture——

Mr. Hardy: Conservative Members claim to represent the agriculture industry and rural England, but their attendance today is not such as to justify the criticism of the attendance of Labour Members by the hon. Member for Flint, West (Sir A. Meyer).

Sir A. Meyer: The attendance is about five to one, but let us not get too bogged down in that argument.
I find some difficulty in intervening in this debate, probably because my knowledge of agricultural matters is slighter than it should be, and also because I find it difficult to understand the implications of the document. I listened carefully to the Minister of State, but I was not clear at the end of his exposition about the direction in which the document was going, about the status of the document or about what sort of policy was likely to emerge.
The common agricultural policy is the favourite answer of all those who dislike the European Community, and, indeed, of many who favour it. I remember that when I argued for British membership of the Community I said again and again that the agricultural policy was the price that we had to pay for the other advantages. Things have changed since then. The other advantages have been slower to come than we expected at the time, but the agricultural policy has proved to be more of a two-edged weapon than it seemed during our negotiations for membership. At first it seemed to consist of nothing but drawbacks, but now that Britain is a member of the Community, although the CAP is cumbersome, and although there are many difficulties, in the

long term it offers this country vital safeguards.
We should not forget the importance of the CAP to the European Community as a whole. It is the only common policy that is working 100 per cent., and which has been working so since the beginning. It may be working badly, but it is in full operation—which is more than can be said for a common energy or transport policy. Therefore, it has an enormous symbolic importance to the other countries of the EEC.
If we want to convince our European partners that we are sincere in wishing to make a success of our membership of the Community, we must be careful about the language that we use in criticising the agricultural policy. I noticed that particularly when I attended the recent Bordeau conference between France and Britain, at which the Prime Minister made a superb speech. One French speaker after another insisted that the CAP must remain. It could be changed, amended or brought up to date to suit modern circumstances, but there could be no question of doing away with it. If we are wise, and if we wish to achieve our other objectives in the Community, we would do well to remember the vital, almost emotional, importance of this policy to our European partners.
Much as the short-term workings of the policy and the prices fixed under that policy have operated to our disadvantage, particularly in producing the enormous budgetary contribution that we were obliged to make until the skill and determination of my right hon. Friend the Prime Minister secured an effective renegotiation—unlike the sham that the previous Labour Government went through—that should not be allowed to conceal the long-term advantage to this country, which is more dependent than almost any other industrialised country in the world on outside food supplies, of being firmly anchored into a community which is self-sufficient in food. We should never allow the temporary difficulties, objections and stupidities to blind us to the single overriding truth. In a hungry world we are part of a community which can feed itself and which has a duty to help the hungry world with its food problems. Many Labour Members feel that the Community has not done that as well as it should have done, but that is not a


reason for pulling out; it is a reason for doing even better.
If, as seems only too possible, the common agricultural policy collapses under the weight of its budgetary deficit—it is already knocking at the ceiling of the own resources mechanism of the Community—and if agreement cannot be reached through the mechanisms of the Assembly, the Commission and the Council of Ministers on a revised budget that will fit agricultural expenditure into the amount that can be raised and still leave a margin for the other Community activities, I do not believe that that will serve the interests of anyone. It certainly will not serve the interests of the Community, it most certainly will not serve the interests of the farmers, and in the long run it will not serve the interests of the United Kingdom.
That said, if the common agricultural policy is to survive, it will be necessary for national aids to play a somewhat larger part than they have played up to now. There has to be a larger role for national support to agriculture. That is why it becomes so important to ensure that these national aids do not constitute—or do not appear to be constituting—any kind of cheating.
I was a little sad to listen to so sensible, balanced, reasonable and knowledgeable a Member as the hon. Member for Bother Valley (Mr. Hardy) talking as if he were addressing his suspicious general management committee and was anxious to prove himself more jingoistic and more suspicious of all foreigners and their works than any Right-wing Tory. I am sure that in his heart of hearts he recognises that this kind of attitude is not merely part of a general dislike of the European Economic Community. It all too easily spreads over into something that is prevalent in the Labour Party. Under the disguise of wishing Britain out of the EEC, some Labour Members pander to the crudest kind of xenophobia.
For those of us who do not have any great hatred of the Labour Party and remember that in the past it has stood for some things which even we on the Government Benches can admire, it is sad to see it going over so totally to that crude kind of hatred of foreigners and all their work. We hear a great deal of talk about how the French have been

cheating over national aids in helping farmers to pay the co-responsibility levy. The media are extremely guilty in this respect. Particularly where French matters are concerned, they will fasten on to the slightest allegation and blazon it in the headlines as a fact.
It emerged at Question Time on Thursday that since 1977 the French Government have not been paying the co-responsibility levy on behalf of their farmers, and that occurred under the previous Labour Government. Since the Conservative Government have been in power, the French have obeyed the rules.
This all emphasises the importance of what my hon. Friend the Member for Eye was saying about the value of having effective laws that are effectively enforced, and, even more important, the value of giving our people the confidence that these laws are being observed. That necessarily implies some kind of policing. If we expect other people to accept inspection, we in our turn must accept it. That was clearly demonstrated in the discussions that took place over the enforcement of fishery limits and catches.
In these complicated and turbulent waters, with all their cross-currents, it is extraordinarily difficult for those who navigate to keep the ship going in the right direction and to keep it upright. Like all my hon. Friends on the Government Benches—those who are enthusiastic about our membership of the Community as well as those who are, to say the best, halfhearted—may I say that I have great confidence in the team now in the Ministry of Agriculture and the way in which it is conducting an extremely difficult operation and preserving a balance. We have great confidence in what the team is doing and strongly support the proposal tonight.

Mr. Buchanan-Smith: With permission, Mr. Deputy Speaker, I should like to reply to the very interesting debate. When we embarked on it this afternoon I scarcely expected either the length in time of the questions or the breadth of the issues raised. The number of contributions and the strength of feeling indicate that, although, on the face of it, this may appear to be a simple matter of investment aids in our dairying and pig industries, it nevertheless raises a great


number of issues which hon. Members on both sides of the House realise are important to their constituents and to the industries concerned. I am therefore, most grateful for the contributions which have been made.
What the House has to bear in mind, and what I have to bear in mind particularly, is that we do not have before us a definitive, precise, proposal from the European Commission. What we have before us—here I apologise to my hon. Friend the Member for Flint, West (Sir A. Meyer), who quite justifiably complained about the complication—is a proposal which at first sight, in terms of its objectives, was relatively straightforward and easily understood but which, in the course of its gestation, has become more and more complicated in one way or another. Indeed, at the Council meeting next week we shall still be seeking clarification of exactly what is meant by it.
It is not a simple, clear "Yes" or "No" that my right hon. Friend and I will have before us next Monday and Tuesday. It is not absolutely clear what we shall have before us. We shall have to consider what is before us and seek clarification of precisely the kinds of point raised by my hon. Friend the Member for Flint, West and others. Then, in the light of that clarification, and in the light of the contributions made in the debate, my right hon. Friend can come to conclusions on how we should deal with this matter in the Council of Ministers. I express my thanks, therefore, to all those who have contributed to the debate. It will certainly help us, in coming to our conclusions, to have had the benefit of the opinion of the House.
I respond to the suggestion of my hon. Friend the Member for Devon, West (Mr. Mills) that we should watch matters carefully. I am accustomed to hearing him say "Watch i "to me in various circumstances. I am alive to this need. That is one of the reasons why we need the clarification—in order to ensure that different countries do not have different interpretations. If that were to happen, it would simply compound the risk of and scope for discrimination against the interests of the British dairy farmer and the British pig producer. I assure my hon. Friend and other hon. Members

that we shall be watching these matters carefully.
In looking at the general background of the two industries, it is important not to get the debate out of perspective. We are talking about aids to investment, but we would be kidding ourselves if we were to feel that the presence or otherwise of an investment aid is the prime consideration of a dairy farmer or pig farmer before he makes an investment. Most dairy farmers and pig farmers that I know are primarily concerned about the profitability of their enterprise or industry.
That is why, Mr. Deputy Speaker, although your predecessor in the Chair was at one point rightly concerned about the width of the debate, in investment matters the general profitability of the industry is relevant. The hon. Member for Londonderry (Mr. Ross) made that point particularly strongly. I accept what he said in relation to some parts of the country where profitability, for a number of reasons—I have not time now to go into them—is not as good as in other areas. Such questions affect the decisions of those farmers to a much greater extent than whether investment aid is available.
My hon. Friend the Member for Eye (Mr. Gummer) also referred to that point. I take note of it and would never regard a simple programme of investment aid as a substitute for what has to be done in relation to prices and to other returns, whatever the economic climate in which the industry is operating and whatever the bank rate may be. That is the background against which an industry has to operate, and what happens in the area of investment aids, although important, is secondary to it.
The hon. Member for Durham (Mr. Hughes) made a fairly penetrating contribution to the debate. I share to a great extent his analysis of the problems in the dairy industry and the pig industry. As he said, over the last number of years in Europe we have got the relativities wrong between the arable sector and the livestock sector. I should be trespassing if I were to embark on that subject in this debate. I accept that we shall not get that right by playing around with investment aid. More fundamental decisions will have to be made. My hon. Friend the Member for Gloucestershire, West (Mr. Marland) also spoke about imbalance


within agriculture. I assure him and the hon. Member for Durham that we are alive to the issue. It is our broader policy to try to get the balance right. When that is achieved, we shall be much better able to tackle the problems of profitability within the different sectors of the industry.
I share the view of the hon. Member for Rother Valley (Mr. Hardy) that we should not be too modest about what we can achieve in terms of dairying costs. We have heard of the difference that high feed and grain costs mean to the dairy producer. One answer is the greater use of grass and grass fodder. A number of farmers have shown already what can be done in that direction. It is a different form of production. In some instances it is less high cost production and in others a more expensive form of production. It is one of the ways in which we can meet the dilemma. The central purpose of the restriction in investment aid is to try to reduce surpluses in Europe and to reduce the cost of the common agricultural policy.
The hon. Member for Truro (Mr. Penhaligon) appreciates that we are seeking to allow farmers who operate on a small scale and who are below the general level of efficiency to achieve a higher level of efficiency. We want to help those farmers. It is not necessarily wrong in a social and economic sense to try to do so. The hon. Gentleman is right to argue that if that policy is successful smaller farmers will increase their production and will add to the surpluses. The hon. Gentleman asks why the policy is being followed and where the crunch comes. If the policy works, it will mean that at each annual price fixing prices will not be pitched at a level to cover returns to less efficient producers.
It is true that smaller and less efficient producers will be increasing production. However, if we can operate greater price restraint at annual price fixings to cover the broad spectrum of producers, that element of price restraint will apply to all producers. If we can cause all producers, especially the larger ones, to exercise more restraint, that restraint will be greater in proportion to the additional production achieved by smaller producers. The argument is not necessarily contradictory. It is right in some instances to encourage smaller producers to increase

their income. I should like to see that happen in the way that I have described.

Mr. Penhaligon: I am interested in what the Minister is saying, and his argument fits in quite well with my comprehension of the issues. There will not be many small farms that will produce more milk, but many of the larger farms will be able to do so. Is the Minister going to Europe with a clear determination to return with a package that embodies a substantial reduction of milk production in the United Kingdom?

Mr. Buchanan-Smith: No. The hon. Gentleman's argument relates to the second part of the motion. Many more farmers will be exempt from the restriction on investment aid in other countries than in the United Kingdom. We believe that within the narrower band of expansion that may take place there will not be discrimination against the more efficient farmers in Britain. We are accepting a restriction in aid so that those who seek to expand their production with the means of investment aid from the Community will do so within a limit or ceiling.
My hon. Friend the Member for Harborough (Mr. Farr) fairly asked "Why 15 per cent.?" There is an element of rough justice. If misery is to be caused by restriction in investment aid, our assessment is that we should aim at a balance of misery across the different countries of Europe and the different dairy producers in Europe. The implications of the 15 per cent. restriction will equate roughly with what we believe will be the restriction placed on other European producers. We are seeking equality and an element of non-discrimination to ensure that our producers, whether in the dairy or pig sectors, are no worse off than anyone else.

Mr. Farr: Has my hon. Friend had an opportunity to reflect on the possibility of having a similar let-out for pigmeat as for dairy products so that the same percentage increase for both products is permissible?

Mr. Buchanan-Smith: I shall consider what my hon. Friend has said on that topic. In the pig sector there are already upper and lower limits on capital expenditure. We believe that the 550 pig places


provision, if there is clarification of precisely what that means, will roughly equate with the upper limit. The 15 per cent. provision would be to add another element that would be a relaxation in some respects of the present restrictions.
If we accept in principle that there should be restrictions, we are seeking to ensure that they do not hit our producers harder than other European producers. We shall consider my hon. Friend's proposal in that light.
My hon. Friends the Members for Hereford (Mr. Shepherd) and Eye spoke forcefully of fairness and policing. My hon. Friend the Member for Devon, West argued that, if the scheme is too complicated and uncertain, others will seek a way round it. I hope that I am always frank with the House. As the proposals stand, they are totally unsatisfactory in that respect. I did not try to hide the reasons from the House. There is discrimination and their application is not clear. We shall be entering the negotiations with the object of obtaining clarification. If we get it, we shall do our best to ensure that each country of the Community puts the same interpretation on the proposals so that our producers are on an equal footing with producers in the other countries of the Nine.
If we are to deal effectively with surpluses, are we not playing around with the problem by introducing restrictions on investment aid? Should we not return to more effective methods such as national quotas and more national policies and aids? This is not the time to enter into that argument in great depth. It has been taken up by my hon. Friends the Members for Banff (Mr. Myles) and Galloway (Mr. Lang). Those who follow the debate on agriculture in a wider sense will be

aware that I have spoken on a number of occasions about the need to consider reform of the CAP to deal with surpluses in a wider and more open way than in the past.
One way in which we could approach this issue is through some form of national financing, but I should be wrong to follow that road now. I assure those of my hon. Friends who have raised this subject that the mind of the Government is open not only to suggestions as regards methods of national financing but to any sensible suggestion from the Commission or from the Government of any other country as to how we could more effectively contain such surpluses and thereby the cost of the CAP.
In recent years, debates on agricultural policy, both in the United Kingdom and Europe, have started from the basis of prejudice. That is one of the great problems. If one country favours one system, it says that it must hold to that system. If one party says that one system is right, another says that it is not prepared to consider it. The problems of surpluses in Europe and the reform of the CAP are such that all of us, no matter what our standpoint, must be readier to listen to constructive suggestions, from whatever quarter they may come. It is in that spirit that this Government will approach the problem.

Question put and agreed to.

Resolved,
That this House takes note of European Community document 9280/80 concerning proposals for Council Regulations restricting investment aids for milk and pig production and while welcoming the objective of the proposals to institute useful measures to reduce the cost of the common agricultural policy, particularly in the dairy sector, supports the Government's intention to safeguard the essential interests of United Kingdom producers.

NATIONAL DOCK LABOUR BOARD

The Under-Secretary of State for Employment (Mr. Patrick Mayhew): I beg to move,
That the draft National Dock Labour Board (Increase of Loans Limit) Order 1980, which was laid before this House on 27th October, be approved.
The Dock Work Regulation Act 1976 limits the amount which the National Dock Labour Board is permitted to have outstanding by way of principal on loans to £10 million but makes provision for that amount to be increased by order to an amount not exceeding £30 million. The effect of this draft order is to increase the limit to £30 million. The purpose of this additional loan facility is to enable the NDLB to finance further voluntary severances of registered dock workers. There is no other purpose and no loan has in the past been made for any other purpose.
Registered dock workers were excluded from the scope of the Redundancy Payments Act 1965 at the industry's request. Instead, a national voluntary severance scheme was established in 1969 by agreement within the national joint council for the industry, and it is under its provisions that the number of registered dock workers has declined from 54,000 to under 24,000, with remarkably little industrial disruption.
The national voluntary severance scheme is administered by the NDLB, which has the statutory duty of keeping under review the size of registers of dock workers in each port. The scheme provides for severance payments according to scales calculated by reference to length of continuous service, in addition to a basic payment. The cost of such severance is met by levies upon employers, calculated as a percentage of gross wages in the industry, and paid through local dock labour boards. The maximum that may be awarded on severance under the scheme is now £10,500, which would be applicable only in the case of a man with not less than 20 years service. That was agreed within the industry in September, because the previous maximum of £8,500 was failing to attract volunteers in sufficient numbers to deal adequately with surplus dock labour.
The scales of severance payments are a matter for the industry rather than for the Government. Compulsory severance is possible, but it is the employers' own preference—expressed through the National Association of Port Employers—to achieve reductions in surplus labour by virtue of voluntary rather than compulsory means.
Although the severance scheme is financed by employers, successive Governments have made loans to the NDLB to spread the costs falling on the industry over a reasonable period. Without such assistance port employers would face the need for frequent adjustments in levy, which might cause considerable difficulty in fixing prices. The 1946 Act, under which the present dock labour scheme was made, contained provision for the Minister to make loans to the NDLB towards the cost of operating schemes. Loans totalling £11 million were made by my Department under this provision between 1969, when the national voluntary severance scheme was introduced, and 1975. Authority for such loans is now contained in the Dock Work Regulation Act 1976, and £2 million in all was loaned under this provision in 1977 and 1978. With the exception of some £200,000 repayable by February 1982, all these loans have now been repaid.
Earlier this year, it became clear to the NDLB that the number of severances required in the near future was likely to be considerably higher than in recent years, and that this was likely to lead to cash flow difficulties for the board. In April, my right hon. Friend agreed to a request for a £6 million loan for severance from the Government and authorised the board to borrow a further £2 million by way of bank overdraft. Subsequently, approval was given last month for a further £1.8 million loan to meet the board's current needs, as the scale of the industry's likely severance requirement began to emerge more clearly. That has brought the board's borrowing up to the prevailing limit of £10 million.
The upsurge in the number of surplus registered dock workers is evidently due to a combination of the current recession in world trade and the continuing containerisation of cargoes, which has greatly reduced the amount of conventional cargo-handling in United Kingdom ports.
I understand from the NDLB that it anticipates a total of 3,000 severances being needed in this financial year with substantial further numbers being needed next year. This might mean a considerable sum of money being required by way of Government loan.
The Government believe that they should stand by the industry in its efforts to reduce its labour force. If those efforts are not successful, more registered employers will go to the wall and the future of some of our major ports will be in jeopardy. The port employers have agreed to increase national severance levies by two percentage points by January 1981 and the Government accept that a higher increase in present circumstances would only aggravate the industry's difficulties. The balance of current severance costs will therefore need to be met from loans.
It is very much in the immediate, as well as the long-term, national interest that the existing surplus labour in the ports should be shed on terms that are mutually agreed. It is fair to say that, when the present limit was fixed for outstanding NDLB borrowing, no one foresaw the scale of the problems that the industry subsequently encountered, or the need that has emerged to increase the scale of severance payments. In the light of present estimates, it is prudent to ask parliamentary approval for the £30 million ceiling permitted by the 1976 Act. I accordingly seek the agreement of the House to the motion approving the draft order.

Mr. Harold Walker: The Minister began his speech by referring to the powers under which this order is made. They are contained in the Dock Work Regulation Act 1976. The Minister was not a member, as I was, of the Standing Committee that considered the Bill. I should like to remind him that his right hon. and hon. Friends not only opposed the provisions under which the House is making this order but voted against any such provision. If my memory serves me right, they voted in favour of curtailing and reducing the borrowing powers embodied in it.
Today's order is welcome evidence of some degree of Government conversion. Fast may that conversion grow and

spread into other fields. Perhaps the Government are being compelled by reality to face up to the facts. Perhaps we have witnessed a triumph of experience over hope. Perhaps it is a "Mayhew turn". I hope that it will lead to bigger U-turns. The doctrine of non-intervention may be diminishing daily, or weekly.
The Minister did not mention Liverpool, but there is little doubt that the timing of the order received some stimulus from recent events in that city. The Government have been pushed along by the recent irresponsible action of mindless militants on Merseyside, who have acted in flagrant breach of a national agreement. During September, it almost caused a national dock strike. I refer not to members of the Transport and General Workers Union or to members of any other union but to the ports employers, or at least some of them. In particular, I refer to the West Coast Stevedoring Company, which is owned by the tax-dodging Vestey family.
I quote from The Guardian of 12 September which said in a leader that day:
It was the refusal of the hard-strapped Liverpool employers to pick up the pay tabs for 170 dockers to be declared redundant as their employer goes out of business which sparked the current strike threat.
I doubt whether anyone, by any stretch of the imagination—and I am not being indifferent to the very real problems of some employers in the industry—could claim that the Vesteys were "hard-strapped", which I presume means hard-up. Incidentally, despite what the Minister said, there has been no significant decline in the number of licensed employers in the last five years.
I am not given to invoking the Daily Mail in my aid, but on 18 September that paper said:
The Liverpool employers went looking for 'bower'.
It is really regrettable that it took the threat of a national dock strike to bring those employers to their senses. We not only have this order before the House; we have the reaffirmation and the improvement of the national voluntary severance scheme, together with a clear commitment from the National Association of Port Employers. I shall quote from a letter signed on 18 September by


the secretary of that association. It said:
The Port Employers accept that the existing practice will continue whereby the temporary unattached register will not be used except for the strict purposes of administering disciplinary procedures within the terms of the National Dock Labour Scheme.
In a separate letter of the same date the National Association of Port Employers, through its secretary—reaffirmed that unemployed dock workers would be reallocated by the appropriate local board to other registered port employers. Indeed, it might be for the benefit of the record if I quoted the letter in toto. It was addressed to Mr. Tom Cronin, who is the secretary of the workpeople's side of the National Joint Council for the Port Transport Industry. It says:
Dear Mr. Cronin, The decision of the National Port Employers is that before 30 September 1980 registered dock workers currently employed by T & J Harrison and Bulk Cargo Handling Services Limited"——
the employers who were going out of business and whose employees had to be reallocated—
will be reallocated by the local board to other registered port employers to commence employment on 1 October 1980.
Then comes a significant sentence.
This agreement and procedure will apply nationally to the ports industry, Yours sincerely, E. Bainbridge.
Not only do we have the order as a consequence but we have reaffirmation of the practices that have been so beneficial in the last few years in improving industrial relations in our docks industry.
Perhaps there are some hon. Members who will say that these pledges were wrung out of reluctant employers only by the threat of strike action. Once again I quote the Daily Mail dated 18 September:
However potentially damaging to the nation, it is a legitimate brandishing of the strike weapon.
That was the threat of industrial action that might have led to a national dock strike in September. In this case in Liverpool just a few weeks ago it was the employers who were jeopardising good industrial relations which had been painstakingly built up over the last few years.
I quote again from the leader in The Guardian. Hon. Members might think

that I have some prejudice and bias in these matters which they might not feel is shared by The Guardian newspaper. That paper said:
Which militant and well-organised union has shed well over half of its members in the past five years without a single serious stoppage? Which supposedly aggressive and strike-happy band of brothers has, through those five years, changed its image from one of 'mindless militancy' to almost excessive respossibility? The answer, in both cases, is the Transport and General Workers Union docks section. As the threat of a national dock strike, the first since 1972, looms on the horizon, it is worth remembering that the industrial relations and industrial efficiency in the docks have improved out of all recognition in recent years. Much of that improvement is due to the imagination and foresight of the former TGWU boss Jack Jones and Lord Aldington, then chairman of the Port of London Authority, who eight years ago, brought the last in a series of national dock strikes to an end with an unprecedented new deal for the dockers.
In the same leader The Guardian said:
It is time to make them (the dockers) an offer that they can't refuse: an offer far, far higher then current rates. That will involve further Government subsidy. In this case it is justified.
The revised national voluntary severance agreement with the increase in the maximum payment still falls a long way below that which The Guardian leader writer calls for. The order provides not for the subsidy to which the leader refers, but a loan which must be repaid with interest. The Minister, if he replies to the points that have been made, can perhaps tell us what rate of interest the National Dock Labour Board will be charged on the loan. He also might tell us whether the board has given any indication of the drawings it intends to make against the new ceiling.
It is worth my emphasising a point that the Minister made—that dock workers are not included in or covered by the provisions of the Redundancy Payments Act. When hon. Members or the public generally look at the maximum scale of compensation payable to dock workers for loss of jobs, they should bear that fact in mind. It is no less important to recognise that few, if any, of the port areas of Britain can offer fresh employment to a redundant docker. Certainly that cannot be done in Liverpool. Severance from dock work invariably means severance from employment. If the House needs to be reminded of this I am sure that the dockers do not.
There is undeniably surplus labour in the docks industry. Hon. Members need only look at the most recent annual report of the National Dock Labour Board. The facts are spelt out there. It would be unrealistic, indeed naive in the extreme, for us to imagine that a man contemplating the prospect of joining the long-term unemployed will do other than put a very high price on the job that he already has.
I have already referred to the great benefits that we have derived from the Jones-Aldington deal. When I say "benefits that we have derived", I mean not only the dock industry, the employers and the workers but the Government and the nation as well, because they have received benefits, too. We all hope that the good industrial relations that have been built up will continue and will be strengthened by provisions such as those to which I have referred and which have been made possible in some degree by the order that we have before us.
We must be prepared to pay for those benefits. That means not only enabling the National Dock Labour Board to borrow the sums that it needs but, where necessary, enabling it to do so on preferential low interest rates for long-term loans. The Government must be prepared to approve the necessary grants needed. They must be prepared to will the resources needed for retraining dock workers. I shall resist the temptation to link that with the criticisms I have made frequently in this House, and will continue to make, about the Government's cutting down of the provision that we make for training when it is crucially important in this area. We all recognise that there is an excess of labour in the docks and that it is in the interests of the ports industry to ease the transfer of that labour out of the docks. We must try to do so, not only by providing financial incentive but by seeking, wherever possible, to retrain dockers for other employment and to make sure that the opportunities for that other employment are available. That also means providing new employment opportunities in the port areas such as Liverpool, where at present job prospects are appallingly grim.
We welcome the order and give it our blessing. However, we should like the Minister to comment on two recent

articles in the Journal of Commerce. My hon. Friend the Member for Bootle (Mr. Roberts) may also be seeking information about the same matters. On 22 October that publication carried two deeply disturbing articles. The front page states:
Shock report may kindle dock strike.
A national dock strike—supported by Continental port workers—is being openly discussed in UK ports.
The strike talk is prompted by rumours of a special Transport Department report, said to be scheduled for release on November 4, which proposes fundamental changes in the way the country's ports are run …
The jobs of some 1,500 Liverpool registered dock workers are likely to be axed and up to three times that number among ancillary staff are believed to be in jeopardy.
The Transport Department's report is thought to contain a hard-hitting plan to abolish local branches of the National Dock Labour board".
The House is entitled to know whether there is a scrap of truth in that report. I believe the report to be nonsense, and I am sure, therefore, that the Minister will welcome the opportunity to say that no such report is pending and that such proposals are not contemplated.
The second article refers specifically to the port of Liverpool again and states:
The port of Liverpool will go bankrupt … unless it receives an injection of cash from the government.
This is the stark truth contained in a secret report drawn up by the Mersey Docks and Harbour Board Company and the National Ports Council …
Among the clutch of proposals is a plan to slash the number of registered dockers in the port by 30 per cent.—about 1,500 men—and cut white collar employees by about 16 per cent. over a two-year period.
If those reports are false, the workers in the Liverpool docks and the community there are entitled to have them slapped down as hard and as quickly as possible. You, Mr. Deputy Speaker, know better than I from first-hand experience that Liverpool has gone through a sustained period of agony. If there is a crumb of truth in those reports, it can only add to that agony.
The Minister may not have the information with him to enable him to comment, but if he can find out as quickly as possible and assure my hon. Friends representing Merseyside constituencies, the dockers and the community in Liverpool. that there is no substance in the


report, I shall be grateful. I repeat that we welcome the order and will give it our blessing.

Mr. Allan Roberts: I have the privilege to represent an area in which a good proportion of the Liverpool docks is situated. A lot of activity in those docks takes place in Bootle and not Liverpool. The containerisation at Sea-forth, which is a profitable part of the dock activities, is in my constituency, as is the profitable grain terminal. I speak, I hope, with the support of the Transport and General Workers Union employees who work in the docks in my constituency, many of whom also live there.
I, too, welcome the amazing conversion of the Government resulting from the action taken by the workers in the Merseyside docks in refusing to allow the employers to use a back-door method to make 170 men redundant. It is amazing to hear that public money will now be used to assist. On Wednesday 25 June 1980 I asked the Minister of Transport whether he would give financial assistance to the Mersey Docks and Harbour Company. He replied:
I do not accept that costs incurred by harbour authorities should fall on the tax-payer."—[Official Report, 25 June 1980; Vol. 987, c. 184.]
He may have avoided the strike threatened in the Summer Recess had he said then what has been said today.
I welcome the order as a small contribution towards helping solve the problems that the dock industry is facing, although it is too little too late. Much more needs to be done. The Minister said that the ability to borrow up to £30 million that is being given through the National Dock Labour Board will be for severance schemes only. I believe that loans should be given for other reasons to assist docks in decline in Merseyside and elsewhere.
In the past financial year the Mersey Docks and Harbour Company made a £7·5 million loss, including a £1·8 million deficit on its trading operations. Over the years it has paid out £20 million in redundancy payments to dock workers. Last year it paid £1·5 million to dockers for whom there was no work, although it also received £1·5 million. It is investing in the docks to try to move from labour-intensive to capital-intensive acti-

vities at half the rate that such investment should be taking place if the company's future and that of the whole of Merseyside is to be secured. It believes that it should be investing between £10 million and £12 million and is investing only between £5 million and £6 million. If more money was made available, the investment programme could be stepped up and the docks, Merseyside and the country would prosper.
We cannot criticise the Mersey Docks and Harbour Company or the workers for not trying to do what they can within the limited finances available. The Liverpool register of dock workers has been reduced from 9,541 in 1972 to 5,186 at the end of March 1980, which is amazing. That has been done without conflict between management and unions. The unions have co-operated fully in shedding the labour that needed to be shed and modernisation has taken place where the capital was available. The reason why there is not more modernisation is that there is not enough capital.
It is interesting to note the management's view of the trade unions in the docks. Mr. James Fitzpatrick, the managing director and chief executive of the Mersey Docks and Harbour Company, said:
I can't believe the dockworker is naturally militant. If he is not given security during a period of change he is going to find himself easily taken down the road by somebody who is going to cause a fracas.
It is because security is lacking and because Government support has not been given to Merseyside that trouble has been created and we faced the threat of a dock strike.
We want the order to be taken further. We want the Government to give aid to the Docks and Harbour Company in the way that the Hamburg authorities and the West German Government give assistance to the port of Hamburg. The company has to dredge the estuary at its own expense. Services such as lighting, which are paid for by taxpayers and ratepayers in other countries have to be paid for by the company and that is reflected in its high costs for loading and unloading.
We want the fact that Merseyside has development area status to help the port. The docks and ports services are classed as service industries, and, although Merseyside has development area status.
the 22 per cent. grants for new investment are not available for the port, which is the biggest industry in the area. Because the Government consider it to be a service industry it does not qualify for the grants.
We want more money from the EEC development fund. We have had £1·37 million from the EEC regional fund, but we want more and we want the Government to get back some of the British taxpayers' money so that it can be invested in Merseyside. We want about £20 million—that is the company's estimate—as a one-off grant to relieve the burden of voluntary severance payments, thereby releasing cash for essential investment and capital investment.
The interests of my constituents, those employed in the docks and the whole of Merseyside are related to activities in the port. The prosperity of Merseyside is dependent on the Government acting as they have in introducing the order, but in going much further to ensure that Merseyside has a future. If there is not an injection of State capital into Merseyside on a bigger scale than is proposed. the docks will die and the company will not be able to solve its problems. It is suffering considerably from the recession in world trade, the domestic recession and the changing pattern and nature of trade. If we want Merseyside to prosper and to be saved, the docks must be saved, and for that to happen the Government will have to be converted a little more than they have already been converted.

Mr. Mayhew: I am grateful for the welcome given to the order by the right hon. Member for Doncaster (Mr. Walker) and by the hon. Member for Bootle (Mr. Roberts).
The right hon. Member was entitled to his fun, and I am only sorry that there was such a small audience to share my enjoyment of it. However, I must tell him that there has been no lightning conversion of the Government as a result of the threatened dock strike on Merseyside. The need for an injection of severance financing by way of a loan was evident earlier in the year and the Government agreed to the full loan facilities requested by the industry. In consequence, we ran up against a statutory

ceiling of £10 million, and we have to seek the authority of Parliament under the 1976 Act to go above that. We seek approval of the order simply to continue the Government's existing policies. The Government have to use the existing machinery to do their best to help the industry to shed surplus labour.
The right hon. Member for Doncaster asked what rate of interest would be charged on the loan. The interest payable will be calculated on a daily basis by the Treasury under section 5 of the National Loans Act 1968 at the lowest rate that would apply to a loan from the national loans fund of the same class and maturity, made on the date that the loan, or part of the loan, is taken out. That means that it will be charged at preferential rates. I cannot give the right hon. Gentleman the precise rate, but there will be an advantage compared with the rate that would be payable if the money were raised on the open market.
The right hon. Gentleman asked what amount was likely to be drawn if the estimate of 3,000 severances this year were fulfilled. That sum would be about £12 million. He said rightly that in an area of high unemployment a worker is motivated to put a high price on surrendering his job. That is a problem that the industry has come up against, and that led it to agree in September to increasing the maximum severance payment to £10,500.
I must dispute the charge of the hon. Member for Bootle of an amazing conversion. He suggested that taxpayers' money was being poured out of a cornucopia. As I indicated earlier, it is a loan and not a grant, and the whole amount that has been lent to the NDLB under this and preceding legislation has been repaid, with the exception of £200,000, which will be repayable shortly. The money is coming back to the taxpayer with interest, but we believe it right to help the board and, through it, the industry to finance the shedding of surplus labour without imposing unnecessary strains on port employers.
The right hon. Member for Doncaster asked me to comment on an article in the Journal of Commerce on 22 October, which suggested that there was a report that recommended the abolition of local dock labour boards. I am happy to give an assurance that the article represents


a mine of inaccurate information. There is to my knowledge no truth in it, and no such report.
The right hon. Gentleman also asked whether a report had been made by the docks and harbour company about future prospects of the port of Liverpool. I understand that a report has today been furnished to my right hon. Friend the Minister of Transport by the company. I have not seen it, and I am not in a position to tell the House of its contents. There is a report that addresses itself to that matter, but I can tell the right hon. Gentleman no more than that. However, I think that he is likely to be more greatly concerned about the first report, which I categorically deny.

Mr. Allan Roberts: My hon. Friend the Member for Liverpool, Scotland Exchange (Mr. Parry) asked the Prime Minister on 31 July this year if she would meet a delegation of Merseyside Members and others to discuss the future of the docks and harbour company. The Prime Minister said that the company was carrying out a study, with the assistance of the National Ports Council, into the finances of the port, with the aim of drawing up a new profitability plan. She suggested that a meeting could successfully take place after that report had been prepared. Now that a report from the company is in the hands of the Minister of Transport, will the Under-Secretary undertake to facilitate a meeting?

Mr. Mayhew: I do not think that any facilitating by me of a meeting between the interests which the hon. Gentleman represents and the Prime Minister would be necessary. The Prime Minister gave an accurate answer at that time, as one might expect.
The hon. Member asked whether the Government should make grants for a number of other objectives, all of them desirable, as anyone who has visited Merseyside recently, as I have done, would know. However, these are matters which are far outside the scope of this order. The Government are concerned here to extend a loan facility. They are not in the business of making grants, as has been made clear.
To conclude my remarks, I need only reiterate what I said at the outset. A substantial reduction in the number of registered dock workers has been made with the minimum of industrial disruption over the past 10 or more years. I acknowledge willingly what the right hon. Member for Doncaster said about the co-operation of the trade unions in bringing that about. It is always sad when a traditional industry is obliged by world forces and technological forces to contract, with a corresponding loss of jobs. I believe that it is right that everything should be done to bring about that contraction of jobs with as little hardship and with as much agreement as possible.
It is because the Government believe that in this context the machinery provided by the 1976 Act gives them a means of assisting the industry itself to bring about this contraction in a smooth way that it is right to make use of the maximum of £30 million by way of loan facilities which the 1976 Act affords.
It is for that reason that we bring forward this order, and I am pleased that it has the support of the opposition.

Question put and agreed to.

Resolved,
That the draft National Dock Labour Board (Increase of Loans Limit) Order 1980, which was laid before this House on 27th October, be approved.

CONSUMER CREDIT

Mr. John Fraser: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Consumer Credit (Exempt Advertisements) (Amendment) Order 1980 (S.I., 1980, No. 1359), dated 8 September 1980, a copy of which was laid before this House on 15 September, be annulled.

Mr. Deputy Speaker (Mr Richard Crawshaw): I take it that it was the intention of the hon. Member for Norwood (Mr. Fraser) to propose discussing at the same time the other two motions on this subject—matter—
That an humble Address be presented to Her Majesty, praying that the Consumer Credit (Advertisements) (Amendment) Regulations 1980 (S.I., 1980, No. 1360), dated 8 September 1980, a copy of which was laid before this House on 15 September, be annulled.
That an humble Address be presented to Her Majesty, praying that the Consumer Credit (Quotations) (Amendment) Regulations 1980 (S.I., 1980, No. 1361), dated 8 September 1980, a copy of which was laid before this House on 15 September, be annulled.

Mr. Fraser: If that will be convenient, yes, Mr. Deputy Speaker.
The Opposition do not propose to press the motions to Divisions, but they provide a convenient opportunity to consider the progress of a very important part of the Consumer Credit Act and its implementation, and I have a few comments to make and one or two questions to ask about the regulations.
The first matter relates to the speed at which it has been possible to implement the Consumer Credit Act. It is one for which I bear rather more responsibility than anyone else. However, I think that we are entitled to think aloud on these matters.
The Royal Assent was given to the Consumer Credit Act on 31 July 1974. Six and a bit years on, on 6 October 1980, the regulations, together with some others, including the total charge for credit regulations, came into force, and still only a portion of the total Consumer Credit Act has come into effect. We are entitled to ask ourselves—and not merely to question the competence of Governments, because both Governments have worked on the legislation—whether we have got the legislative process wrong if it has taken six years to get to the

making of these regulations and there is still a great deal more to follow.
The Consumer Credit Act was widely advertised as being "Truth in lending". Those are the words of the present Chancellor of the Exchequer. The Labour Government, who introduced the Consumer Credit Bill for the second time, used the same advertisement for their legislation. Yet it was only on 6 October of this year that we began to get "Truth in lending" in advertisements and quotations, and we have not yet got it in the agreements themselves. We are entitled to ask ourselves by way of self-examination why it has taken so long to implement the Act and why the pace of progress is so slow.
The regulations fit together, but I should like to see them coming along for rebates for early settlement, for example. One of the most extortionate parts of money lending practice is where someone pays off a loan early and is not able to get suitable rebate, where the period for notice of redemption is far too long, or where calculations of rebate are done in a way which suits the lender rather than being utterly fair to both parties. My question, therefore, is to ask whether the Government have any reflections about the time which it is taking to bring these matters into force.
Secondly, I wonder whether the Government have any reflections on the complexity of these regulations. We see a reference to the total charge for credit regulations, one of which contains a fraction which is insoluble except with the help of a computer which has an iterating device. When I tried it out on a computer, I made 12 or 13 attempts to get the right answer. That illustrates the degree of complexity which the regulations have reached.
There is the difficulty that if a simple principle is incorporated in regulations it gives rise to absurdities such as the one of including the premiums for endowment policies in the total charge for credit and in some circumstances getting a negative rate of interest. That was possible. If a regulation incorporates a simple principle, it leads to absurdity. However, if an attempt is made to avoid the absurdities of a simple principle being applied and exceptions are made, the result is a regulation of absurd complication. It is difficult to choose between


them under our present legislative system.
When we deal with advertisements other than advertisements for credit, both Administrations have taken the view that the best way of dealing with the control of advertising is by means of a code of conduct. However, it would be impossible to translate into legal language the rules about advertising medical products or the rules about misleading advertisements which are applied by the Advertising Standard Authority and place upon the advertiser the obligation to respect the spirit of the rules as well as the letter of the rules. In Europe, where the Government are still discussing a draft directive on advertising, both Administrations have said that that method of a legal code dealing with the control of advertisements is not possible. Yet, when we come to rules about advertising for credit, we have placed on ourselves extremely complicated regulations which are not easy to understand.
I spent several hours reading the definitions of "simple", "intermediate" and "full" advertisements. Within a few hours, I had forgotten them again. I am in the same difficulty as anyone else. I am not in any way criticising, because I bear as much responsibility for these matters as anyone, but is any thought being given to the simplification of these regulations and perhaps to a different approach, even if it involves changes in primary legislation?
I asked whether the Government had any thoughts about simplifying the Consumer Credit Act because the next set of regulations to which we shall probably come are those relating to the entry and content of agreements. The great danger is that we shall get into an area where people are more concerned about the form and ritual of an agreement than with providing full information for the consumer. The exercise will be more concerned about whether documents were exchanged in the right order rather than drawing the attention of the consumer to the contents of the documents.
The Minister will know that there has been a good deal of criticism about the quotation and advertisement regulations in that they apply to finance houses and clearing banks but do not apply to building societies, insurance companies and local authorities in relation to loans

for house purchase. The banks and finance houses believe that this is an unfair discrimination against them. The Consumers Association, to who I have spoken, think that it would be right if the same rules applied to building societies as well as to finance houses in respect of advertisements and quotations. My view is that it is better to have the same rules for advertisements.
When it comes to quotations, there are already many statutory requirements for building societies to give information to consumers about the loans that they are to take. Consumers getting a loan from a building society, insurance company or local authority are likely to have separate legal advice. I can understand that there is less need for quotation regulations applying to building societies and insurance Companies. On advertisements however, the same code of conduct should apply to societies and to finance houses.
That is not to say that I have seen many advertisements from building societies offering to lend people money to purchase houses. They generally advertise to take deposits. Good luck to them. The difficulty may be more hypothetical than real. There is some substance in what the Finance Houses Association says in relation to advertisments:
The effect of these exemptions is that any advertisement of mortgage facilities by a finance house or a bank must, if it quotes a rate of interest, quote that rate as calculated according to the formulae prescribed in the Regulations—the true rate of charge. But an advertisement of mortgage facilites by a building society or an insurance company need not do so. Even though the mortgage may be identical, even though the rate may be identical, such advertisements may quote an apparently lower rate.
If that turned out to be the case, the association has a point of substance.
Another question I wish to put relates to the recent Monopolies and Mergers Commission's report on credit cards. Almost immediately after publication of that report, garages, in particular, but perhaps also other institutions, have begun to make a surcharge for the use of a credit card. If one takes the literal interpretation of the total charge for credit regulations which, in turn, affect the quotation and advertisement regulations, I believe it is right to say that the 15p charged on the purchase of petrol at a garage alters the total charge for credit


and invalidates the quotation given by the credit card company when it issues its statement and gives the total charge for credit. It is possible that 15p is within the margins of error and makes no difference, but it illustrates the difficulty of the existence of complex regulations in a situation in which credit card companies have no control. The companies cannot know what charge is being made by the garage proprietor.
Another question that arises is whether advertisements, at a filling station, of an extra 15p surcharge for use of a credit card is a simple credit advertisement. I do not think that it is. Is it an intermediate credit advertisement? Is it a full credit advertisement? Would the information have to be provided if there was a 15p surcharge on each sale of petrol? I am not suggesting that people should have to provide unnecessary information in those circumstances. It is, however, a question that has been put to me. I do not know the answer. I put the question now to the Minister.
I offer my congratulations to the Director General of Fair Trading, who has produced some exellent literature as a guide to the regulations that we are debating and associated regulations. It is a splendid job. Looking through the publication "Advertisements and Quotations Regulations", I wonder whether it would be possible to produce, in a different legislative framework, the Director General's guidance as the regulations themselves. I am sure that such a move would appeal to many people who have to deal with the regulations from day to day. I wonder whether it would be possible to publish the guidance as a code of conduct, saying that those who advertise for credit must follow the spirit as well as the letter of the publication. There could be a de minimis rule and any mere technical breach of regulations that did not mislead would be overlooked. I feel that this would be a better approach, bearing in mind that six years have elapsed while we have progressed only about halfway through implementation of the 1974 Act.

Mr. Robin Squire: I speak as a consultant for Lombard North Central. I have worked for 12 years in the credit finance sphere. The hon. Mem-

ber for Norwood (Mr. Fraser) made most of the points that I wished to put for. ward, but I should be grateful for the patience of the House in order to reiterate a few of them.
The original White Paper that preceded the Act—it was entitled "Reform of the Law on Consumer Credit"—specifically highlighted the possibility that there would be an argument for absolving such undertakings as building societies from the same requirements, and it met the position head-on by saying that they would need to conform with the same rules as those that would be required for finance houses.
There is considerable disappointment in the credit industry that these rules on advertisements have not been applied to building societies. The news that the exemption is to be extended to insurance companies and friendly societies does nothing to remove their concern. We have to ask whether the Government have any role in what would appear, at least on the surface, to be some form of discrimination. I am sure that my hon. Friend the Minister will confirm that no such discrimination is intended, but the fact that there is a built-in discrimination in relation to advertisements leads one to think that in this respect there are first and second-class citizens, and first and second-class lenders. Whatever their reputation, I assure my hon. Friend that the FHA and the banks are in the forefront and contain some household names whose financial probity cannot be doubted. They feel that they are being made to suffer when compared with building societies.
The hon. Member for Norwood already referred to the question of the total charge for credit, and that is a valid point. I support his comments. Surely, however, the moving spirit behind the Consumer Credit Act was the need to simplify matters for the would-be borrower, presumably because it was felt that he would wish to know the true rate of interest on whatever loan he was undertaking. Many hon. Members may doubt whether that is his concern, or whether the amount of payment is more important.
Whatever the answer, we seem to be facing the possibility that two loans made for an identical purpose, one from a


building society or a friendly society, and the other from a bank or a finance house. will quote different interest rates—although the underlying rate will be the same—and that can only increase confusion and goes nowhere near providing so-called truth in lending.
These issues are important. I urge my hon. Friend to say whether the Government still have the matter under review and whether, should the confusion that I and one or two other hon. Members envisage come about, they will review these provisions and seek to eliminate these important anomalies.

Mr. Michael Neubert: Because of the horrendous complexities of the Consumer Credit Act I do not intend to do more than make a simple point. I do not seek to widen the debate. I wish to refer to the apparent disparity of treatment between finance houses and banks on one hand and insurance societies, friendly societies and building societies on the other.
Originally it was thought that all would be treated equally in terms of mortgages and advertisements. First the building societies were exempted and now, under the order and regulations, insurance and friendly societies are to be made exempt. My attention has been drawn to the anomaly by one of the aggrieved parties—the Finance Houses Association. With the banks they are left at a disadvantage when making superficial comparisons between offers of mortgage facilities. The whole principle of fair competition rests on fair comparisons. Too often the consumer makes rather facile comparisons between what is available in the market and might come to an entirely wrong decision.
It is unfortunate that now the Government have felt it necessary to step in and require people offering credit to do so in highly exacting terms—in the context of mathematical formulas that command the skill of a senior wrangler. It is unfortunate that they should knowingly and apparently with deliberation introduce an incompatability of comparison. There might be a good reason for it but I cannot see it.
I hope that my hon. Friend can provide the answer. If there is to be "truth in

lending" and if some bodies are to be exposed to rigorous requirements in advertising their credit facilities, it is unfair that there should be an inequality of entitlement when a mortgage is involved. After all, for most people a mortgage is the most important transaction in their lives.

The Under-Secretary of State for Trade (Mr. Reginald Eyre): I have listened with great interest to the contributions in this short debate. On an appropriate occasion I should like to discuss the near-philosophical point made by the hon. Member for Norwood (Mr. Fraser) about how these complex requirements can be applied in society in a way which does not involve the full legalistic implications which necessarily follow such legislation.
We can all agree about the complexity of the Consumer Credit Act 1974. I sometimes wonder whether less comprehensive legislation would have been wiser. Perhaps it would not have got beyond square one. Perhaps the only realistic course was to adopt the Crowther committee recommendation to have a single enactment covering consumer credit and hire generally. However, I wonder whether we could develop an alternative system involving codes of practice.
Whatever options there might have been we cannot change history. We have the Act and considerable progress has been made in implementing it. I cannot give the hon. Member for Norwood precise details about the further implementation of the Act but I shall bear in mind what he has said about the outstanding requirements. Like the Act, the orders and regulations necessary to implement it are complex. It does not follow that the requirements with which traders must comply are in themselves necessarily complex. It is often a problem of picking out the provisions.
The hon. Member for Norwood offered his congratulations to the Director General of Fair Trading. I thank him and join him in congratulating the director and his office on the production of such excellent and helpful documents which will be of considerable assistance to people in understanding the requirements


of the Act. They will help traders to pick out the provisions which apply to their specific businesses.
My right hon. Friend the Minister for Consumer Affairs recognises that the regulations are complex. She has made it clear that she will monitor the regulations and keep them under review. If there are real problems my right hon. Friend is always willing to examine them. I shall bear in mind what the hon. Member for Norwood said about the possibility of simplification.
The House will now expect me to deal with the instruments to which the prayers relate. Then I wish to refer briefly to the "truth in lending" package generally. I cannot agree that it would be right to annul statutory instruments No's 1359, 1360 and 1361. The Consumer Credit (Exempt Advertisements) (Amendment) Order—No. 1359—merely clarifies the exemptions in the original exempt advertisements order. There cannot be real controversy about the original order or the largely technical amendments in the amendment order.
The Consumer Credit (Advertisements) (Amendment) Regulations and the Consumer Credit (Quotations) (Amendment) Regulations have more meat, as became clear in the debate. The regulations broaden certain exemptions from the requirements of the advertisements and quotations regulations. The principal regulations do not apply in so far as an advertisement or a quotation relates to an agreement secured by a land mortgage and made by a building society or local authority. I noted that the hon. Member for Norwood raised that subject. I appreciate the interest expressed by my hon. Friends the Members for Hornchurch (Mr. Squire) and Romford (Mr. Neubert).
It was thought right to make this exemption in respect of building societies and local authorities because compliance with the normal requirements would have presented special problems for them. In some respects the problems are no different from those faced by other creditors, such as those mentioned by my hon. Friends and the hon. Member for Norwood. However, it was considered that it was necessary to take special aspects into account. It appeared that all local

authority and building society offers could, willy-nilly, have been quotations having to comply with the quotations regulations. Yet they are not "quotations" in the rather special sense envisaged in section 52 of the Act, the purpose of which is to give consumers who are shopping around between credit facilities the right to obtain a written statement of the terms on which the trader is prepared to do business. The local authority and building society offers are not made, as the hon. Gentleman fairly said, in response to "shopping-around" inquiries. It proved impracticable to separate the latter from the former. My right hon. Friend took the view that, in the prevailing circumstances, the additional burden on local authorities and building societies was unjustified.
When the regulations had been published, it was drawn to the Department's attention that an anomaly had been created in that insurance companies' topping-up loans were often made in parallel with building society loans, and that the application of different rules to insurance company loans was anomalous. Very careful consideration was given to the extent to which exemption should be widened. It would have been possible to exempt from the requirements of the advertisements and quotations regulations all house purchase loans. This would have meant yet another dividing line and yet another complication. It was also apparent that changes had taken place in the house purchase loan market but it was not clear whether these were permanent or merely in consequence of the then shortage of building society loans.
I appreciate that what I shall say will not be in accordance with the wishes of my hon. Friends the Members for Horn-church and for Romford or in line with the views that they have expressed this evening. However, my right hon. Friend decided that the right course was to use the dividing line already existing in section 16 of the Act and the order under it to make the same exemption from the advertisements and quotations regulations as is made in relation to agreements. The principle underlying this distinction, which I ask hon. Members to consider, is that the exemptions may not apply to creditors who carry out normal consumer credit business, that is, are not specialists


in house purchase loans. She recognised, however, that this was not an ideal solution—indeed, there was no ideal solution She therefore asked the Director General of Fair Trading to keep the exemptions under review and report in due course. I hope that my hon. Friends will feel that that gives them a satisfactory assurance in respect of the review.
I know and regret that some organisations see in the exemption an unjust discrimination between credit grantors of different types. We have some sympathy with their complaint, but my right hon. Friend thinks that to depart from the section 16 dividing line—at any rate without experience of how the exemptions work and without the Director General's report—would be a mistake.
I turn now to more general matters. The package of orders and regulations which came into operation on 6 October are an important step in implementing the "truth in lending" provisions of the Act in relation to the ways in which traders granting credit or supplying goods on hire seek business. In the past advertisements have often given an inadequate indication of the terms on which the trader is willing to do business. Sometimes little or no hard information was given, reliance being placed on such phrases as "HP terms available". Information was often given in terms making comparison between competing offers impracticable. This was particularly true of rates of charge which might be the flat rate—which is roughly half the true rate—or which might omit to take into account charges other than interest, which can make a great difference to the cost of the credit.
It was in order that consumers should be better informed that Parliament, in section 44 of the Consumer Credit Act 1974, imposed a requirement on the Secretary of State to make regulations as to the form and content of advertisements. That section goes on to say that the regulations must contain provisions with a view to ensuring that an advertisement conveys a fair and reasonably comprehensive indication of the nature of the credit or hire facilities offered and of their true cost to persons using them. This was a tall order and it is not surprising that the regulations which have emerged from over five years' work are complex. It was necessary to spell out

in detail the requirements as to information to be disclosed to enable the consumer to make an informed choice. It was also necessary to make special provision to cover particular circumstances, for example showrooms, and media, particulary television. Much as everyone would have liked to have simple rules applying to all advertisements, that was not on. The division of advertisements into three categories—simple, intermediate and full—was likewise a recognition of the practicalities.
The hon. Member for Norwood raised three questions, the first with regard to building society advertisements. I have explained the situation about quotations and the special position of the building societies, and I can say only that I have noted the hon. Gentleman's point. His second question was of a practical nature, and it related the 15p charge made by petrol stations for accepting payment by means of credit cards.
The charge does not come within the total charge for credit because it is not within the scope of the term "transaction" as defined in regulation 1(2) of the total charge for credit regulations. The purchase of petrol, I am advised, is not a linked transaction within the meaning of section 19(1)(a). That means that the purchase is not made in compliance with the terms of the credit card agreement. I hope, therefore, that the hon. Gentleman will feel satisfied that there is no difficulty in that respect.
The hon. Gentleman's third point was not a question but was his very kind reference to the Director General of Fair Trading, for which I have already thanked him.
It was in order that consumers should be better informed that Parliament developed all these regulations in the wake of section 44. I wish to emphasise, however, that the regulations were drawn up only after very extensive consulation with trade and consumer bodies and that many changes were made to our earlier proposals. My right hon. Friend took great pains to try to avoid on the one hand imposing excessively onerous requirements on traders, and on the other leaving consumers with little or no more information than they have received in the past.
It was mentioned, and I understand that it is true, that the Office of Fair


Trading and trading standards departments are receiving numerous inquiries. I am not surprised that queries are arising at this stage. They are inevitable with so important an innovation. Moreover, the inquiries themselves show that traders are taking the new requirements seriously. I have referred already to the helpfulness of the booklets that are available. There is also a recently released leaflet for consumers called "There's more to credit than just HP". I hope that those publications will ease the task of traders in implementing the regulations and help to ensure that consumers are properly informed.
In conclusion, I want to make it clear that my right hon. Friend sees truth in lending playing a significant role in achieving greater or fairer competition in the credit and hire area. In one sense it is already a highly competitive area. The variety of institutions and types of credit is very wide indeed, but unless people are able to make an informed appraisal of the different facilities, that variety alone will not ensure competition. It may merely bewilder the consumer, who may not be in a position to compare one facility with another. That is why comparable information is particularly important in the credit and hire area. Without such information, competition will not really work. One must recognise the regulations potential importance in stimulating competition. I think that traders whose terms are competitive should not look on them merely as a tiresome new regulations but should welcome the fact that their competitors will no longer be able to indulge with impunity in misleading or uninformative advertising.
My earlier remarks should not be taken to mean that we have set our face against any change in the regulations at any time. My right hon. Friend is sure, however, that the essential course is to give them a fair run to see how they work. I assure the House, my hon. Friends, and the hon. Member for Norwood—especially with regard to the point about finance houses—that my right hon. Friend and the Director General of Fair Trading, upon whom the Act imposes a statutory duty in that respect, will keep their working under review.

Mr. John Fraser: I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.

CHARITIES (LORD HASTINGS HOSPITAL TRUST)

Resolved,
That the draft Charities (Lord Hastings Hospital Trust) Order 1980, which was laid before this House on 22 July, be approved.—[Mr. Newton.]

PRISON OFFICERS' HOUSES (CLASE, SWANSEA)

Motion made, and Question proposed, That this house do now adjourn—[Mr. Newton.]

Mr. Donald Anderson: I am glad to have this opportunity to open a short debate on a matter which, in my view, illustrates very well one aspect of the Government's attitude to housing in South Wales, namely, the response of the Welsh Office to the proposed sale of prison officers' houses at Clase in my constituency.
I suggest that the problem is best seen in the context of the overall housing crisis in South Wales. Perhaps we in Wales have become accustomed to low quality housing for too long and have given too little priority to housing as against our perhaps understandable prime concern with the problems of unemployment. Yet more than 15 per cent. of houses in Wales are substandard, compared with 9 per cent. in England. On most indices of unfitness, including those properties built before 1919, Wales comes bottom of the league table for Britain.
Certainly the general housing position has deteriorated under this Government. I commend to the Minister the recent report on this subject by the South Wales chief housing officers group, published in October last year and entitled "A report on the housing financial allocation to housing authorities for 1980–81". This has naught for the comfort of Welsh Office Ministers. The housing officers stress that the housing service in Wales is taking
a far greater proportion of the public expenditure cuts than any other service".


Indeed, over the period 1980 to 1984 there will be a reduction of 40 per cent. in real terms in housing allocation.
No matter to what sector of our housing we turn—whether it be to public sector housing, private sector housing or the third arm, the housing associations—we see a constantly gloomy picture. The public sector is affected by the cutbacks. In the private sector starts have plummeted over the past year, in part because of the high mortgage interest rates, the general economic situation and the high unemployment in South Wales.
Hardly the most Socialist or radical group in South Wales, the South Wales region of the National Federation of Building Trades Employers, writes to me:
The influence of the Government's economic policy is having catastrophic consequences for those firms relying on house-building as their main activity. As was stated, this is particularly true for those firms who have for many years made a major contribution to the house building in the public sector. The forecast in both the Swansea City and Lliw Valley borough councils' HSIPs for the period up to 1984 will inevitably mean some firms will cease to trade.
The letter then gives the housing completions in Swansea in the private sector. In 1978–79 they were 398; in 1979–80 they were only just over half that figure, at 208. The comparative figures for the public sector are equally alarming. In 1978–79 there were 205 completions; in 1979–80 there were 156. A little more than 80 are forecast for 1980–81. With that shortfall in both the public building programme and the private building programme, it is hardly surprising that the waiting lists in all of South Wales increased to the present amount—well in excess of 29,000. Homelessness is also on the increase.
As the supply of public sector housing diminishes, because of the public expenditure reductions and the projected sales of council houses as part of the Government's policy, so the demand increases. That is partly for social reasons—the lower household size, which comes from an ageing population, break-ups of families and so on—but also because of the Government's policies, particularly in respect of the worsening unemployment figures in South Wales. All of that leads to defaults on mortgages, with those who default looking to the public sector for housing. This means that fewer can move from the public to the private

sector and hence release homes for those on the waiting list. It must be remembered that our percentage of council houses in the total housing stock in Wales is less than 441st in England. For example, in my local authority in Swansea the percentage of council houses in the total housing stock is less than 30.
That is the context. We turn now to the specific problem and its importance for the Swansea housing situation. This is an excellent case study of the Government's ideology ratting on the housing needs of a local community.
The prison department owns 28 houses in Swansea, four of them with four bedrooms and the remainder with three. At the moment 23 are vacant, because prison officers in these days dislike living in compounds and prefer to live in their own accommodation, where they also enjoy rent allowances. So these houses are empty and surplus to the prison department's requirements.
The houses were built in the 1960s and are suitable for family housing. Al-thought they lack central heating, they are roomy, well-maintained and have garages. They are similar to the Swansea council's pre-war parlour-type houses which are among the most popular part of the housing stock of my local. authority.
The Home Office wishes to sell and the Swansea council wishes to buy, but Welsh Office approval is needed. The council wants to buy because these are attractive properties for its needs and because money is available in this financial year due to a projected underspend. That underspend does not arise from incompetent forecasting on behalf of the council. In fact, a scheme to build' about 100 houses on the Graig brickworks site in the same area was 17 per cent. over the housing cost yardstick and had to be abandoned. Those houses would have cost more than £20,000 per unit, compared with the asking price of £10,000 to £12,000 for the prison officers' houses.
Apart from the costs of the Graig brickworks scheme, the financial commitment that would have been necessary for 1981–82 was too large in respect of the uncertainties of the housing allocation that the Welsh Office would make, bearing in mind the fact that this year's allocation by the Welsh Office was not notified


to local authorities until February. This tardiness has created substantial programming difficulties for housing authorities. However good reasons, the Swansea council has money available.
The council also has a large and growing waiting list of 2,435 families. One knows the arguments about how artificial waiting lists can be, but it is the view of my housing authority, and also my own personal impression from regular contact with constituents, that this is a real waiting list. It is underlined by the fact that homelessness in the city is a large and growing problem. Swansea is one of the black spots in Wales in this respect. Last year there were over 1,000 inquiries at the homelessness unit.
At £10,000 to £12,000, the prison department properties are good value for the city. The latest figure—in September this year—on a tender basis for two-bedroomed houses is £20,834, compared with £10,000 to £12,000 for these three-and four-bedroomed properties.
It is not surprising, therefore, in the light of that price differential and the large and growing needs of the housing authority, that my right hon. Friend the Member for Swansea, West (Mr. Williams) and I, and the whole city council, including the Conservative councillors, unanimously sought consent from the Welsh Office for the purchase of these houses.
There are a number of additional cogent reasons for that purchase. I have already mentioned the completions in the public sector in Swansea being reduced year by year so that the projected figure for this year is about 88. I have mentioned the state of the private housing market in the city. In effect, it is dead, as a recent deputation from the National Federation of Building Trades Employers underlined to me and to my right hon. Friend the Member for Swansea, West. On an impressionistic basis, I know of a cheapish house in a popular part of the city that has been on the market for over two months. During that time there have been only two visits and no offers. There are ample building society funds available for prospective purchasers, but few, if any, takers.
Those houses are likely to be unattractive to the private buyer. They are in

terraces, and they are unmistakably institutional, having been built for a public authority. To that extent they are less attractive to an individual in the private sector. Another factor of which the Minister should be aware is that the Home Office is responsible for the roads and lighting on the estate. There would be considerable administrative problems if the houses were sold as single units. The charges for roads, lighting, and so on, would have to be apportioned between individual purchasers.
That is the background to the problem. The city council needs Welsh Office consent, and it has approached the Welsh Office. The response of the Welsh Office has been wholy negative, unreasonable and wooden. As far as I am aware—I stand to be contradicted by the Minister—there has been no inspection by the Welsh Office, no suggestion by the Welsh Office that if the houses did not sell on the open market its position would be reconsidered, and no suggestion by the Welsh Office that it would consider an alternative buyer such as a housing association, although, as no doubt the Minister knows, there is at least one housing association in the area that is interested in the houses. Although it would be a second best because of the nomination rights of the local authority, it would at least have the beneficial effect of reducing the ever-extended housing waiting list.
I say that there is little expectation of a positive response on the housing association front, and I am fortified in that view by an article in today's issue of the Western Mail, which states:
The housing associations in Wales are launching a campaign this week to protest against any further cuts in Government aid which some believe could lead to the disappearance of a third of them.
The report goes on to say:
The problem is particularly acute in Cardiff and Swansea, where the waiting lists for accommodation are longest and the resources most thinly spread … Mr. Gareth Hughes, Welsh director of the National Federation of Housing Associations, said, ' If the cuts are made there will be no new houses built in Wales at all, and as many as a third of the housing associations will have to close. The situation is potentially dangerous'.
So great is the danger that the Gwalia housing association, which was planning a special celebration on 5 November to mark its five hundredth house in the city


of Swansea, will now use that event as a protest against further cuts in aid to the housing association.
If the Welsh Office has reacted in such a negative way to the plea of the Swansea city council, one perhaps has no high hopes that it will respond any more positively to an approach to it for consent from a housing association.
What was the nature of the reply of the Minister, dated 21 October, to the points that I put to him? He said that if the Welsh Office were to give consent it would be contrary to the policy of discouraging local authorities from buying existing property. That is clearly the doctrine. He also said:
I believe that to allow the City Council to proceed in this case would not only be contrary to that policy but would be a complete negation of our views on private home ownership. The right course should now be to dispose of the houses on the open market if they are indeed surplus to existing requirements.
The phrase
if they are indeed surplus to existing requirements
must suggest that the Welsh Office has not even bothered to contact the Home Office to see whether these houses are surplus to requirements. It has answered wholly from an ideological standpoint, without seeking in any way to check the facts on which it based that reply. Had it bothered to contact the Home Office it would have found, without any difficulty, that these houses are indeed surplus to Home Office requirements.
The Minister went on, in his letter of 21 October, to say:
The purchase of existing dwellings places a quite heavy financial burden upon local authorities, and as it is the Government's policy to reduce public expenditure wherever possible it would not be seen right to be allowing a local authority to add to their existing commitments.
If one uses the public expenditure argument, surely the Minister will look at the figures that I have given of the tender prices that the city council is now receiving for smaller properties—double the amount for which these houses are available on the market—and see what excellent value they are, rather than have new building in the public sector for the city council to take over. This is not in any way to municipalise because, after all, this is not a transfer from the private

sector to the public sector, but a cash transfer from one part of the public sector, namely, the prison department, to another part of it, namely, a local authority. Indeed, on any figures, looking at house against house, or value against value, this would be a reduction in public expenditure.
The message is clear from the Government and the Welsh Office. They prefer to leave these properties empty and to be vandalised than to let them go to my local authority.
I am told that the local vandals have not yet noticed the 23 properties that remain empty. However, there are signs that they are beginning to notice. Already the shed windows in the back gardens of these properties have been smashed. Six of the windows have already been smashed. These first signs will further attract vandals and make the houses even more difficult to sell on the open private market. This will be a process of cumulative decline and the estate will rapidly become a wasteland as the last prison officers leave, as the nights darken and as the remaining tenants are unable to exercise some supervision over the estate. What an uncaring response! What a triumph of a doctrinaire Government!
I refer the Under-Secretary of State to the final flourish of the South Wales chief housing officers' group in the report to which I have referred. Having outlined the growing housing crisis in South Wales, it states:
We therefore urge the Government to reconsider its attitude towards housing and towards a philosophy which cannot and will not work in the current economic situation. Unless this reconsideration takes place we believe that the housing problems of South Wales will reach a point when they may be insoluble.
That is not the report of a group of radicals that the Government may think they can lightly disregard. It is a report from those in the front line—the directors of all the South Wales housing authorities—who see at first hand the effect of the Government's policies and who react in that way against the effects of those policies.
Had the Welsh Office, on a reasonable consideration of this case, given its consent, 23 families from the ever-growing waiting list in Swansea would have been immediately and decently rehoused. To them and to all those on the waiting list


in Swansea, to my colleagues from Swansea, including my right hon. Friend the Member for Swansea, West and my hon. Friend the Member for Gower (Mr. Davies) who support me tonight, and to all those in Swansea in inadequate accommodation, the Welsh Office is saying in terms "Doctrine rules. Continue in your disadvantage. Our aim is to roll back the public sector"—this is set out so shamefully and so eloquently in the letter that I received from the Minister—"and to bring a new Tory freedom". This is a sad case and a sad feature of Conservative housing policy. What a perfect commentary on a wholly ideological response to a deeply human housing problem in Swansea.

Mr. Alan Williams: As the Under-Secretary of State will appreciate, though these houses happen to be in the constituency of my hon. Friend the Member for Swansea, East (Mr. Anderson), the housing list is managed on a Swansea city council basis and any decision that is taken on these houses will affect my constituency as well as that of my hon. Friend. I support my hon. Friend's argument.
At the time of the election there were many who were led to believe that the Conservative Party, if it became the Conservative Government, would support the family, the home and the aspiration to have a home. What has become of that? It is clear from repeated declarations and actions by the Administration that they regard as worthy of consideration only those who are willing to buy their homes.
The Under-Secretary knows that redundancies in Wales are multiplying and that closures and redundancy notices occur day in and day out. Many people are reluctant to make the long-term commitment to purchase a property. For most of those in my constituency and in that of my hon. Friend the only type of home for which they can hope is a new, rented one.
In common with other hon. Members, my hon. Friend and I hold regular Saturday morning surgeries. Normally not a Saturday goes by without my hon. Friend or I holding a surgery in the

constituency. My hon. Friend also finds that at least 50 per cent. of the constituents who come on Saturday mornings come about housing problems, despite the fact that housing is a matter for local government. More than 2,500 people are waiting for housing in Swansea. I do not seek to make a political point, but the Under-Secretary knows the importance of current Government policy and its effect on house building in the public sector.
Those 2,500 people have little or no hope of being housed in the foreseeable future while the Government pursue such policies. Some of those on the housing list will never be accommodated in a council house. As youngsters grow up and aspire to have homes of their own they will join the housing list. They have no prospect of being housed. We have a small opportunity to do something to help. I could understand the Welsh Office arguing that such houses should be sold if there were a scarcity of houses for sale in Swansea. If someone were to walk or drive through the city, or visit an estate agent's office or read the South Wales Evening Post, our local evening newspaper, on any evening of the week, he would discover that, far from a scarcity of housing for sale in Swansea, there was a glut.
If the Under-Secretary persists with this policy, he will rob the couple of dozen of those in Swansea who are trying to sell their homes—perhaps because they have had to move as a result of the Prime Minister's advice to go elsewhere to find the jobs that are denied them in Swansea—of a chance to sell them. Until now he has insisted, unnecessarily, on transferring public houses to the private sector. If the hon. Gentleman wants to support the house owners of Swansea, he should avoid putting an extra supply of houses on the market when there is no need. If he wishes to help those whose housing need is most acute, he should add houses to the local authority's housing stock, because the local authority is already under severe pressure.
The Under-Secretary is well aware that Swansea has many old steel houses which were built just after the war. In my hon. Friend's constituency there is a project to refurbish those properties. Only a fortnight ago, the housing director told


me that the steel houses in my constituency—in Waunarlwydd and West Cross—may not be refurbished, although they are in need of it. Funds may not be available from the Government. Houses that could be saved may slither into rusty decline. They will have to be abandoned. At the same time, houses are to be put on the market—although there are people in the housing queue—and they will remain empty for some time, because the housing market in Swansea is flat. That is the tragedy.
In addition, we even find that organisations such as housing associations which are not noted for political activity have tried to emphasise the desperate need in this respect. There is one housing association in Swansea which I would gladly see closed down. We have had exchanges with the Department about its activities. It is one of the least responsible organisations that I have ever come across. However, another the GWALIA Association—has been in touch with the Prime Minister and the Welsh Office trying to stress the desperate need that it sees for new rented housing in Swansea. Like the local authorities, it finds that it will be deprived of funds.
Let us not deceive ourselves that the Government will get the best possible bargain in selling these houses if they go ahead with this policy. There was the recent decision to sell the prison governor's house in Gower Road, Swansea. It was not sold on the open market; it was sold by private charter. A constituent of mine, who insists that he could and would have paid more money for it, was denied that opportunity because the Government told the agent that they wanted whoever would settle first at the set price. There is no pretence that the Government will necessarily get the best prices for the sale of these houses.
In any case, it is ludicrous that the local authority should be in a position in which it would have to pay more to build two dozen houses to help people in the queue than to buy the houses that were available. If the Under-Secretary is concerned about public expenditure, he should welcome the initiative by the local authority because it is not adding to public expenditure. The money would come out of the funds already allocated to that authority. Not only is it not adding to public expenditure; it is getting

better cost benefit—it would have more houses by buying these than by building new ones. The Minister should welcome this initiative which would add to the efficiency of the housing department in Swansea.
If the Minister does not intend to be helpful tonight, I hope that before he makes a final decision he will ask the Swansea city council for an analysis of its housing list. How many are on that list? How many disabled and priority cases are there? We see these cases week in and week out—people with severe medical conditions who need these moves and cannot be accommodated because the whole housing system is in a log jam. There are no new houses coming on to the market to start mobility in the rental systems within the local authority. I hope that the Minister will at least do this if he will not give us a positive response tonight.
If the Government refuse this perfectly reasonable request from the Swansea city council, they will be seen as having sold out the aspirations of the people in Swansea, who want nothing more than a roof over their heads, in pursuit of rigid and, in this case, stupid and costly Tory dogma.

Mr. Ifor Davies: I welcome the opportunity to intervene very briefly in this short debate. I congratulate my hon. Friend the Member for Swansea, East (Mr. Anderson) on raising this important issue. He has outlined the case fully. I declare an interest in that part of the administration of the city of Swansea comes within my constituency.
On this question of housing there is no greater problem confronting any of us than the appeals that we receive week in and week out from people who are looking for a roof over their heads. The record of this council is as good as any in its efforts to house people. However, in 1979–80 the figure for homeless people was over 1,000. The council deserves the Government's support in trying to house the homeless.
I have been informed on good authority that the Minister's Department has offered the houses free of charge to the West Glamorgan health authority. If that is so, it should be challenged in the House. It would be a direct contradiction


of the letter that my hon. Friend for Swansea, East has. If the Minister cannot reassure us about that tonight, will he investigate the matter and clarify the situation? I urge him to reconsider the matter and give the Swansea council an opportunity to meet the tremendous demands made on it to house people.

The Under-Secretary of State for Wales (Mr. Wyn Roberts): It may be helpful if I set out some of the recent history of the central issue raised tonight by the hon. Member for Swansea, East (Mr. Anderson), and followed up by the right hon. Member for Swansea, West (Mr. Williams) and the hon. Member for Gower (Mr. Davies).
Let me first assure the hon. Member for Gower that I have no knowledge of a proposed offer to the West Glamorgan area health authority, but I shall make inquiries. However, I point out that it is not for the Welsh Office to make such an offer. The houses are owned by the Home Office.

Mr. Ifor Davies: I have it on good authority that the rumour is true. If it is, there must be something wrong if the Home Office has not informed the Welsh Office.

Mr. Roberts: I understood the hon. Gentleman originally to say that the Welsh Office had offered the houses to the area health authority. I assure him that that is not so. I have assured him that I shall look into the matter, although, as far as I am aware, the position is as I have outlined.

Mr. Alan Williams: I realise that the Minister has been caught on the hop, but, if the circumstances described by my hon. Friend the Member for Gower (Mr. Davies) are correct, it is important for us to know in the very near future. Will the hon. Gentleman undertake to notify the three of us within the next 48 hours, as it will only take a telephone call to check the facts?

Mr. Roberts: I give the right hon. Gentleman that assurance.
Swansea city council wrote to the Welsh Office on 29 September for approval to acquire the houses at Clase. I shall be returning to the contents of the letter in

a moment. The Welsh Office replied to the council with commendable speed on 2 October. A week or so later, the hon. Member for Swansea, East raised the issue with me and with my hon. and learned Friend the Minister of State, Home Office. My reply, which was sent on 21 October, fully explained my reasons for turning down the council's application.
In my letter to the hon. Gentleman I reminded him that the Government's policy is to discourage local authorities from buying existing houses. To allow Swansea city council to proceed in this case would not only be contrary to our general policy, it would be a complete negation of our views on home ownership. I told the hon. Gentleman—and I tell him again now—that the right course is for the houses to be sold in the normal way by the prison department on the open market.
The hon. Member has raised the matter again, and although he has not brought any new facts to my attention, I am glad of the opportunity to explain the Government's position to him.
It is our policy in housing to encourage owner-occupation. The Government have consistently stressed their desire to extend home ownership as widely as possible. We know that that is popular in Wales. Consequently, we have devised a seven-point plan to bring that about. The first is the sale of council houses to sitting tenants. The second is, the sale of local authority owned land to private builders, with planning permission, for starter home schemes or, in partnership with builders, to provide other forms of low-cost housing. Thirdly, local authorities can make better use of the available resources by building for sale where they are unable to develop partnership arrangements. They can improve older property in their ownership for sale under the Government's new scheme. They can even sell unimproved homes for improvement by the purchaser.
That could be especially attractive for occupiers of older council houses built between the wars since they would be free to choose their own time and terms for the improvement works and the local authority would be freed from the often considerable expense of improvement. I am as aware as any hon. Member of


the problems that we meet as constituency Members. Often they are concerned with repairs and improvements to existing homes. The Government are doing their utmost to help. I am pleased to say that in Wales the level of owner-occupation is already high, and we would, of course, wish it to be even higher.
We feel that the balance between the private and the public sectors has been going the wrong way over the years, both in housing and in other fields. We have acted to reverse that movement. We believe that, in general, there are too many houses in the public sector. I accept that this masks some remaining needs, such as accommodation for the elderly, but certainly the stock of general needs housing—three- and fourbedroomed accommodation—is too great. According to the figures supplied by Welsh local authorities in their housing investment programme submissions this year, there are about 286,000 dwellings owned by local authorities in Wales. That is about 26 per cent. of the total housing stock—just over a quarter. There are, I understand, almost 65,000 dwellings in Swansea, of which nearly 20,000 are council owned. That represents about 30 per cent. of the total—a high figure in my view. It seems to me that Swansea city council's priority ought, therefore, to be looking to correct the imbalance by selling some of that stock. It would require the sales of almost 3,000 of its houses to bring it into line with Wales taken as a whole.

Mr. Alan Williams: With respect to the Under-Secretary and having listened to what he has said, I must say that I cannot feel a lot of respect for him. I have never heard such unadulterated twaddle and rubbish in my life. The hon. Gentleman and I have been personal friends for some years, but I ask him, before he goes any further, with this arrant nonsense, to check what real life is like behind the phoney statistics that he is peddling.
My hon. Friend the Member for Swansea, East (Mr. Anderson) and I have had to see us in recent weeks a succession of young families who have been told that the only hope for them, from the council's point of view, is for the families to split up, the children to be taken into care and the parents to find accommodation for themselves. If the Under-Secre-

tary feels that that is evidence of a surplus of council housing in Swansea, I do not know how he forms his judgments. I do not understand the peculiar warped and twisted sense of values that he is peddling.

Mr. Roberts: We are all accustomed to the right hon. Gentleman's extremist and excessive remarks. His comments on what I have said are typical. If the facts are as he suggests, the position is surely no tribute to the high proportion of public sector housing and its management in Swansea.
One of the most significant elements in our Housing Act is the right that we have given to council tenants to buy the houses in which they have been living, often for many years. We have relaxed controls in the private rented sector with the introduction of shorthold tenancies which, of course, the Labour Opposition have threatened. Through our improvement for sale scheme, we shall be trying to promote the rehabilitation and sale of older houses by local authorities. What we have done in the Housing Act is to shift the emphasis away from the extension of public sector housing although, of course, we all accept that there will always be a need for new dwellings in special categories, and we do not deny that public sector housing will always have a significant part to play. Certainly I accept that local authorities have an important part to play in housing, not only in the public sector but in the private sector, too. I venture to suggest that their role should become even greater.
The Government's general policy is quite clear, and it is equally clear that it applies in this case. I do not expect the hon. Member for Swansea, East to agree fully with our views on municipalisation. This is an issue of principle on which the battle lines have long since been firmly drawn. But I would expect him to agree that what the council proposes is a clear and straightforward case of municipalisation, and therefore I would expect him to recognise that my decision is inevitable. The houses in question are certainly in the public sector now, and they are to be put on sale on the open market. What the council wants is to add the houses to its existing stock. If that is not municipalisation, I do not know what is.
Of course, we accept that there can sometimes be occasions when local authorities may buy existing houses. The Department wrote to authorities earlier this year to remind them of the long list of categories of acquisition still permitted under the terms of the Housing Act 1957.
There are also areas where we are content to allow local authorities to add to their housing stock, apart from statutory obligations which arise, for example, in areas covered by confirmed compulsory order. We allow acquisition of property blighted by public knowledge of slum clearance or other local authority proposals, and we have agreed to acquisition by agreement from elderly owner-occupiers who are unable to maintain their homes and who are being rehoused by the local authority. We are also prepared to allow reacquisition of dwellings previously sold under pre-emption arrangements. But, as I made clear earlier today in answer to a question from the hon. Member for Caernarvon (Mr. Wigley), where old pre-emption arrangements have lapsed, I do not agree that reacquisition is right. Clearly for an authority to do so would mean that the authority was acting to bolster up the local housing market and safeguard the price base.
Some of the arguments advanced by the hon. Member and his right hon. Friend the Member for Swansea, West struck me as very curious. If we adopted them, they would result in intervention in the local housing market and in rising house prices.
In one area, which I have already mentioned briefly, we even encourage acquisitions. The Housing Act 1980 introduces the improvement for sale scheme. Under this scheme, authorities can acquire dwellings, usually vacant and run-down, improve them, and then resell them. In this way, acquisition by authorities can encourage our policy of home-ownership as well as rehabilitating some of the older housing stock. Authorities which take advantage of this scheme can have the benefit of an Exchequer grant towards the costs. The scheme has been devised because we are very much aware of the problems which exist in these areas of older housing w here, all too seldom, do local

authorities undertake positive action to secure the renovation and improvement of such houses.
I accept that Swansea is tackling its housing action areas in an energetic way and achieving results, but there is still much to be done. Local authorities have the freedom to buy in these circumstances without formal approval where the objective is to resell once the house is restored to a good standard.
But Swansea city council's reasons, at least the reasons the council advanced to us for wishing to purchase the houses at Clase, fell into none of these categories. I hope that the hon. Member for Swansea, East will not mind if I refer to the letter from the council which sought approval for its acquisition of these houses. The hon. Gentleman said that there were a number of cogent reasons for the council seeking approval for the purchase and various reasons have been advanced this evening. But the council gave the Welsh Office only one reason. It said that it had been unable to proceed with a house building project this year. The chief executive wrote——

Mr. Anderson: rose——

Mr. Roberts: I must finish this paragraph.
The chief executive wrote:
As a consequence, there is an underspend on our programme which my council wishes to utilise in respect of these dwellings at Clase. In the circumstances, it was felt that this was the most expedient way of using the consequent underspend, particularly at this point in time in relation to the financial year".
That is what the Welsh Office was told by Swansea council. Now this, if I may say so, reveals a sorry state of affairs.
What we have been told is that the council are not able to spend its capital allocation on one project, so it thinks that it can quickly use up the money by buying these houses at Clase. It is not for me to comment on its financial planning, or the arrangements within its housing programme, but I would say that it need not spend its allocation just for the sake of it.

Mr. Anderson: rose——

Mr. Roberts: I need not emphasise the importance of cash limits. They must not be exceeded. The recent action of my right hon. Friend the Secretary of


State for the Environment on capital allocations in England speaks for itself. So far, we have been able to avoid parallel action in Wales but the most careful planning and financial management by authorities is necessary.
Capital allocations to councils are not targets they have to reach. They are absolute limits which must not be exceeded. I would rather see Swansea city council underspend its allocation than have it use it to finance property transactions to the public sector. This is simply not a worthwhile use of public money.
But of course there are other worthwhile uses to which Swansea could put the money. It has active housing action areas as I have mentioned already, where much needs to be done. The council has now more scope to encourage improvements in the private sector with grant aid—and the Housing Act 1980 enables it to assist with grants for essential structural repair. Of course, at the lower end of the housing market—an area where I know Swansea is active—there is scope for further mortgage assistance either for house purchase, where building societies are not active, or in support of essential improvements.
Perhaps I could take this opportunity of stressing that there is no shame in underspending an allocation. We know that problems develop and our best laid schemes fail to materialise or are delayed. This is why we maintain a careful monitoring system on housing expenditure, and why we are prepared, if the opportunity offers, to re-allocate one authority's unspent provision to another.
Hon. Members suggest that the houses at Clase could not be sold in the private sector. They suggested that it is a poor time for the Home Office to be selling. I find that extraordinary. If the houses are offered at too high a price market conditions will certainly ensure that they are eventually sold at a lower price, to the benefit of the individual purchasers. I cannot think that the hon. Members really want the city council to use public money to intervene in the market to keep up the price of houses. That was the conclusion of the argument by the right hon. Member for Swansea, West. I am certain that I speak for my right hon. Friend the Home Secretary when I say that he would not want Swansea city

council to use public money in paying a price for the houses which would be higher than the price determined by the open market. The Home Office wants to sell the houses and I understand that it does not see any great difficulty in selling them in the normal way to individuals on the open market.

Mr. Alan Williams: In that case, why does not the Under-Secretary of State agree that the local authority can buy them at whatever the lower price is supposed to be? Why should they be sold to the local authority at a higher price than on the open market? Let the local authority have them at that price and that will satisfy the hon. Gentleman's worries.

Mr. Roberts: If the houses are placed on the open market any individual can buy them. Surely the right hon. Gentleman does not wish to deprive these citizens of Swansea of the opportunity to purchase these homes.
I expect building society mortgages to be available for such purchases by private individuals but it would be more in keeping with this Government's policy to make the council's unspent allocation available for mortgage lending here, if it proved necessary, rather than use the money to purchase for its own stock. Why does the council not follow that procedure?
I have carefully considered what has been said, but I see no reason to reconsider my previous decision. It would be a complete negation of our policy on private home ownership if I allowed Swansea city council to proceed as it wishes. The Government's aim is to reduce the scope of the public sector and this could not be achieved if we allowed local authorities to use public money to buy houses which otherwise would be bought by private individuals. The purchase of these houses by Swansea city council would do nothing at all to increase the housing stock of the area. It would reduce the council's ability to spend its allocation on other, more worthwhile purposes. It would involve also the expenditure of scarce resources which, spent another way, might result in more worthwhile housing assets at the end of the day.
Indeed, I add—in case hon. Members have not thought of it—that even if the


council were to buy these houses and to rent them to tenants the tenants would, in due course, have the right to buy them under our Housing Act. And I am sure that they would exercise this right.

Mr. Alan Williams: Let them.

Mr. Roberts: The right hon. Gentleman may say "Let them". In that case, why go through all the procedure of Swansea buying the houses, of putting tenants into them and then of those tenants buying the houses when the houses could be placed on sale immediately? By agreeing with me on that score, the right hon. Gentleman and his hon. Friends have conceded my point.
We do not wish to interfere unnecessarily in the affairs of local authorities, but what Swansea city council now proposes is in direct conflict with our policies and it cannot be allowed. I have listened carefully to the right hon. Gentleman and his hon. Friends, but I have to say that my earlier decision cannot be changed.

Mr. Anderson: Could one sum up the Minister's position by saying that the Welsh Office is prepared for these houses to remain indefinitely for sale and be vandalised rather than let them be transferred to the Swansea city council and help reduce the growing army of despairing young people who cannot afford housing otherwise?

Mr. Roberts: That is a totally unfair summing up of the Welsh Office position. These houses will be put on the open market just like any other houses. There is no reason to suppose that anything will happen to these houses that might not happen to any other houses that are put up for sale. The hon. Gentleman is quite wrong in his forecast. He can trust the Home Office to look after its own property and to ensure that these houses are put on the open market. He can be sure that the citizens of Swansea who wish to buy them will have the chance to do so, as will anyone else, on the open market.

Question put and agreed to.

Adjourned accordingly at twenty-three minutes to Ten o'clock.